AUD/USD recovers intraday losses as risk-on impulse rebounds, US inflation in the spotlight

• AUD/USD has rebounded strongly to test the psychological resistance of 0.7000.
• A rebound in the risk-on impulse has diminished the DXY’s safe-haven appeal.
• The US CPI will remain in focus, which is seen lower at 8.1%.

The AUD/USD pair has recuperated its entire intraday losses and has printed a fresh intraday high at 0.6966. It seems that the asset has got a fresh blood infusion as a risk-on impulse has rebounded and the US dollar index (DXY)’s safe-haven appeal has eased. The asset has formed an open rejection-reverse now and is likely to add gains after establishing above the opening price at 0.6963.

The DXY has tumbled to near 103.60 as bulls have exhausted after printing a fresh 19-year high at 104.20. After the upbeat Nonfarm Payrolls (NFP), investors are now focusing on the US inflation. The mathematics of a rate hike by the Federal Reserve (Fed) will be derived after solving the duo.  Investors are seeing US inflation lower at 8.1% against the prior print of 8.5%.

As higher US NFP bolstered the odds of an aggressive rate hike stance in June, lower inflation print is advocating for not so aggressive hawkish tone by Fed policymakers. Therefore, the dilemma between underpinning stronger NFP and lower CPI has resulted in some potential profit-booking in the DXY.

On the aussie front, mixed economic data from Australian agencies are driving the antipodean. Australian quarterly sales data for the first quarter of CY 2022 has landed at 1.2%, higher than the expectation of 1%. While the monthly and yearly figures of National Australia Bank’s Business Confidence printed at 10 and 20 have underperformed the market consensus of 14 and 23 respectively.