AUD/USD remains below 0.6700/200-day SMA, moves little after Chinese inflation data – by hareshmenghani AUDUSD China NFP Fed Currencies
The prospects for further policy tightening by the Federal Reserve later this month remain supportive of elevated US Treasury bond yields and assist the US Dollar to attract some buyers on the first day of a new week. In fact, the USD Index , which tracks the Greenback against a basket of currencies, recovers a part of Friday's heavy losses to a fresh monthly low and turns out to be a key factor acting as a headwind for the AUD/USD pair.
That said, reduced bets for any further interest rate hike by the Fed after the one expected in July might hold back traders from positioning for any meaningful upside for the USD. Investors seem convinced that the US central bank will soften its hawkish stance sooner rather than later and the expectations were fueled by the rather unimpressive US jobs report on Friday, which showed that the economy added the fewest jobs in 2-1/2 years in June.
The aforementioned fundamental backdrop suggests that the path of least resistance for the AUD/USD pair is to the upside, though China’s economic woes continue to act as a headwind for the China-proxy Aussie. The worries were fueled by softer Chinese inflation figures, which showed that the headline CPI fell 0.2% in June and the yearly rate remained flat. Moreover, the Producer Price Index fell by the 5.4% YoY rate during the reported month.
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