AUD/USD again retreats from 0.6800 on upbeat Aussie Consumer Inflation Expectations, softer China CPI/PPI

• AUD/USD eases from intraday top but stays on the way to reverse the previous day’s pullback from 11-week high.
• Australia’s Consumer Inflation Expectations rise to 5.0% in May, versus 4.6% prior.
• China CPI improves on MoM eases on YoY, PPI drops in April.
• Softer US inflation data, recently release hawkish RBA documents favor Aussie bulls ahead of US PPI.

AUD/USD takes a U-turn from the intraday high of near 0.6800 as bulls struggle to cheer upbeat inflation clues from Australia amid mixed China data published early Thursday. However, the softer US inflation and hawkish statements in the Reserve Bank of Australia (RBA) documents released under the Freedom of Information (FOI) request keep the Aussie pair buyers hopeful.

China’s headlines Consumer Price Index (CPI) eases to 0.1% YoY from 0.7% prior, versus 0.3% expected, while the Producer Price Index (PPI) slides to -3.6% YoY compared to -3.2% market consensus and -2.5% previous readings. Earlier in the day, Australia’s Consumer Inflation Expectations for May rise to 5.0% versus 4.6% prior.

It’s worth noting that the RBA documents showed that the Aussie central bank paths with 4.8% cash rate show inflation at target in late-2024.

Elsewhere, market sentiment improves as softer US inflation data weighs on the hawkish Fed bets. Also supporting the cautious optimism is the US policymakers’ preparations to avoid debt ceiling expiry despite failing in the initial attempt. Furthermore, expectations of the US-China policymakers’ meeting and Australia’s readiness to have close ties with China also underpin the mildly positive sentiment and underpin the risk barometer pair’s run-up.

Amid these plays, S&P 500 Futures print mild gains and the US Treasury bond yields extend the previous day’s downbeat performance, which in turn weighs on the US Dollar Index (DXY) and puts a floor under the AUD/USD price.

Having witnessed the initial market reaction of the Aussie and Chinese inflation clues, AUD/USD pair traders should pay attention to the risk catalysts for intraday directions ahead of the US Producer Price Index (PPI) for April, expected to ease to 2.4% YoY.

Technical analysis

AUD/USD bulls need a daily closing beyond the two-month-old ascending resistance line, around 0.6820 by the press time, to keep the reins.