AUD/USD buyers flirt with 0.6300 preceding key China/US consumer-centric data

• AUD/USD awaits more clues to extend the bounce off yearly low, steady of late.
• Doubts over the latest rebound, pre-data anxiety challenges the upside moves.
• China inflation, trade numbers will direct immediate moves amid hopes of a pullback.
• US Retail Sales, Michigan CSI will also be important for fresh impulse.

AUD/USD steadies near 0.6300, after a tragic rebound from the 2.5-year low, as traders await data from the key customer China during early Friday in Asia. In addition to the pre-data anxiety, the lack of confirmation of the latest run-up in the pair also seemed to have challenged the buyers of late.

That said, a third consecutively softer US Consumer Price Index (CPI) jostled with the 40-year high Core CPI to challenge the market’s outlook on the US inflation conditions even if the broad view favors the hawkish Fed bets and the US dollar. Talking about the data, the DXY dropped 0.70% to 112.45 by the end of Thursday’s North American session. It’s worth noting that the US CPI rose to 8.2% versus 8.1% market forecasts but eased as compared to the 8.3% prior. The CPI ex Food & Energy, mostly known as the Core CPI, jumped to 6.6% while crossing the 6.5% expectations and 6.3% previous readings.

It should be observed that the money markets now fully price-in the 75 bps Fed rate hike and the same could have also fuelled the Aussie pair as some on the floor have also placed bets on the 1.0% rate hike.

Even so, firmer US Treasury yields and the recent coronavirus updates from Beijing and Shanghai renew the market’s fears, which in turn challenge the AUD/USD buyers.

Earlier in the day, global rating agency Fitch also stated that rising labor costs, ongoing workforce shortages, high inflation and rising interest rates are dampening corporate issuer expectations around the strength of Australia’s post Covid-19 pandemic recovery.

Amid these plays, Wall Street closed with notable gains and so did the US Treasury yields. However, the US Dollar Index (DXY) failed to cheer the firmer yields and posted the biggest daily loss in over a week.

Looking forward, China’s headlines CPI for September, expected 2.8% YoY versus 2.5% prior, will be important for the AUD/USD traders amid fears of more hardships for the dragon nation. Also on the Asian calendar are the September month trade numbers from the dragon nation. Following that, the US Retail Sales for September, the preliminary readings of the Michigan Consumer Sentiment Index (CSI) and the University of Michigan’s (UoM) 5-year Consumer Inflation Expectations for October will be crucial for clear directions.

Also read: US Retail Sales Preview: Positive surprises eyed for dollar bulls to regain poise

Technical analysis

AUD/USD remains captive inside a five-week-old bearish channel, currently between 0.6410 and 0.6140.