- AUD/USD falls as the Asian session begins as traders brace for US CPI data.
- US CPI expected at 2.9% y/y, core CPI at 3.7% may influence Fed rate cut debates and affect USD.
- NY Fed survey keeps inflation expectations steady, underscoring lingering concerns about price pressures.
- RBA's Kohler points to Australia's inflation challenge and dampened near-term growth outlook.
AUD/USD starts the Asian session below its opening price by 0.05% after making minimal gains of 0.12% on Monday. A rare economic calendar had investors turning to comments from a Federal Reserve official, earnings from the U.S. Treasury Department and market sentiment, with traders awaiting US inflation numbers. At the time of writing, the pair was trading at 0.6529 after hitting a weekly high of 0.6543.
Australia's economy could cool in the short term
Sentiment was mixed as Wall Street ended the session with the Dow Jones up but the S&P 500 and Nasdaq down. Investors appear jittery ahead of Tuesday's U.S. inflation report as January's U.S. consumer sentiment Price index (CPI) is expected at 2.9% y/y from 3.4%. Core CPI is expected at 3.7%, down from 3.9&.
That said, Monday's US calendar revealed the New York Federal Reserve's survey of consumer inflation expectations came in at 3% for one year and 2.5% for five years, unchanged from December.
Given this situation, if inflation continues to fall, it will be negative for it American dollar, as investors could price the Fed's rate cut sooner rather than later. This follows Fed Chairman Powell noted that they could begin easing policy before inflation reaches 2%.
Meanwhile, Reserve Bank of Australia (RBA) economist Marion Kohler said inflation was still too high, adding that it would take time to reach its target. She added that services inflation remains high and expects economic growth to remain subdued in the near term.
On the data front, the Aussie economic calendar will feature the Westpac Consumer Confidence Survey alongside the NAB Business Confidence. On the US front, inflation data is widely expected.
AUD/USD Price Analysis: Technical Outlook
After dipping below the 100-day moving average (DMA), AUD/USD remains neutral to the downside, supported by buyers holding the exchange rate above 0.6500. If sellers break below this level, the next support would be at 0.6468 on February 5, followed by the psychological level of 0.6400. On the other hand, if buyers retrace the 100-DMA at 0.6536, it could open the door to challenge the 200-DMA at 0.6568, followed by the 0.6600 mark.