AUD/USD steadies around 0.6750 ahead of Aussie employment data, US Retail Sales

• AUD/USD struggles to extend the previous day’s corrective pullback from weekly low.
• Softer US PPI, mixed concerns surrounding China and Fed test traders.
• Australia’s Consumer Inflation Expectations, employment data for August will be crucial for immediate directions.
• US Retail Sales will be the key ahead of next week’s Fed decision.

AUD/USD treads water around 0.6750 as traders await Australia’s monthly employment numbers during early Thursday in the Asia-Pacific region. The Aussie pair marked a corrective pullback from the weekly low, after witnessing the heaviest daily slump in two years the previous day, but the recovery failed to gain any major fundamental support to prevail ahead of the key data.

On Wednesday, global markets remained sluggish after witnessing heavy volatility, due to the US Consumer Price Index (CPI), the previous day. Even so, the risk appetite improved a bit, or say consolidated, due to the traders’ search for fresh implications.

US Producer Price Index (PPI) declined to 8.7% YoY in August from 9.8% in July, versus 8.8% market forecasts. Details suggest that the PPI ex Food & Energy, better known as Core PPI, also eased to 7.3% YoY from 7.6% but surpassed the market expectation of 7.1%.

With the mixed data for inflation, market players struggled to carry the previous day’s hawkish bias for the Fed, despite expecting either a 0.75% or a full 1.0% rate hike by the US central bank in the next week’s Federal Open Market Committee (FOMC).

Elsewhere, US President Joe Biden’s rejection of US fears and China’s stimulus are some of the key developments that should have favored the risk appetite. However, the Sino-American tussles and the energy crisis in Europe seemed to have challenged the optimism.

Amid these plays, the Wall Street benchmarks printed mild gains while the Treasury yields retreated from the multi-day high, posting mild losses at the end.

Moving on, Australia’s Consumer Inflation Expectations for September, expected 6.7% versus 5.9% prior, will offer immediate directions ahead of the key Aussie jobs report. Forecasts suggest the Aussie Employment Change to increase from -40.9K to 35K while the Unemployment Rate to rise to 66.6% versus 66.4% prior. Even so, the Reserve Bank of Australia’s (RBA) cautious mood might challenge the AUD/USD bulls.

Also read: Australian Employment Preview: Will labor market upturn save the aussie?

Following that, the US Retail Sales for August, expected to remain unchanged at 0.0%, will be important to watch for clear intraday directions.

Also read: US Retail Sales Preview: Can consumers keep up with inflation? A breather could weigh on the dollar

Technical analysis

A two-month-old ascending support line, at 0.6700 by the press time, precedes the yearly low of 0.6680 to restrict short-term downside of the AUD/USD pair. The recovery moves, however, needs validation from the monthly resistance line and the 50-DMA, respectively near 0.6850 and 0.6890 in that order. Overall, AUD/USD is likely to hold lower grounds but could remain range bound.