AUD/USD retreats towards 0.6850 amid anxiety ahead of US inflation

• AUD/USD reverses from a fortnight top, snaps two-day uptrend amid mixed clues.
• China’s return failed to impress Aussie bulls even as Premier Li hints at more stimulus.
• Treasury Yields ease from multi-day top, stock futures print mild gains but cautious mood before US CPI test buyers.
• Mixed prints of Australia’s NAB sentiment data also probe AUD/USD bulls amid bearish bets on RBA.

AUD/USD bounces off intraday low as it pares the first daily loss in three around 0.6875 during early Tuesday morning in Europe. In doing so, the Aussie pair struggles to cheer mildly positive headlines from China amid pre-US inflation anxiety and mixed geopolitical concerns.

Bloomberg recently reported that China’s Premier Li Keqiang vowed more policy support to drive up consumption in the economy. The news also signaled that China will adhere to multiple measures to stabilize growth, employment and prices.

Elsewhere, the National Australia Bank’s (NAB) sentiment figures for August printed mixed numbers and failed to impress Aussie bulls. That said, the NAB’s Business Conditions gauge reprinted the 20.0 figure versus 27.0 expectations while the Business Confidence rose to 10, past 6 market forecasts and 7 prior.

It should be noted that the market’s latest chatters surrounding China President Xi Jinping’s aim to reassert Beijing’s influence during the first foreign trip after covid-led lockdowns underpins the cautious mood and weigh on the AUD/USD prices. On the same line could be the Financial Times (FT) news suggesting mixed views over US President Joe Biden’s chip plan that challenges China. Additionally, expectations that the People’s Bank of China (PBOC) will refrain from any monetary policy change during Thursday’s meeting also tested the pair buyers.

Previously, the broad US dollar weakness, amid pre-inflation consolidation and an absence of the Fed speakers, seemed to have underpinned the AUD/USD pair’s bullish bias. Also likely to have favored the AUD/USD price is the Monday Holiday in China.

Amid these plays, the US 10-year Treasury yields retreat from a three-month high, down two basis points (bps) to 3.34%. Even so, S&P 500 Futures and the stocks in the Asia-Pacific zone print mixed performance by the press time.

To sum up, AUD/USD prints the typical pre-data anxiety and hence the pair’s further moves hinge on the US Consumer Price Index (CPI) data for August, expected to ease to -0.1% MoM versus 0.0% prior. The results will be more important considering the latest divergence between the hawkish Fedspeak and cautious comments from the Reserve Bank of Australia (RBA).

Technical analysis

A one-month-old previous resistance line, around 0.6865 by the press time, holds the key to the AUD/USD bear’s return, until then, buyers can keep their eyes on the 200-SMA hurdle surrounding 0.6920.