AUD/USD kicks off the week on the front foot near 0.6700, China’s inflation eyed

• AUD/USD opens the week on the right footing, near 0.6700.
• US Dollar licks disappointing US NFP-inflicted wounds amid productive US-Sino talks.
• All eyes now remain on the US CPI data and RBA Governor Lowe’s speech this week.

AUD/USD is seeing a positive start to the key United States Consumer Price Index (CPI) week, as Aussie bulls cheer Friday’s sharp sell-off in the US Dollar, gearing up for the Chinese inflation data release this Monday.

The US Dollar is nursing losses against its major competitors after Friday’s US labor market report showed weaker-than-expected growth in the headline Nonfarm Payrolls data. The US economy added 209K jobs in June vs. 225K expected and the downwardly revised previous reading of 306K. The wage inflation component in the jobs report rose 4.4 annually while the Unemployment Rate in the US ticked lower to 3.6% in the reported period, as widely expected.

Unimpressive US jobs report triggered a massive sell-off in the US Dollar alongside the US Treasury bond yields across the curve, as the US data dampened expectations of further rate hikes by the US Federal Reserve (Fed) following the expected 25 basis points (bps) rate hike in July.

In response, the AUD/USD pair jumped nearly 1% on Friday and briefly topped the 0.6700 level, where it now wavers. The pair also draws support from ‘direct’ and ‘productive’ discussions between US Treasury Secretary Janet Yellen and senior Chinese officials after Yellen spent hours with them in a meeting over the weekend.

Looking ahead, immediate attention now turns toward the Chinese CPI and Producer Price Index (PPI) data due for release later in the Asian session on Monday. The main event risks, however, for the Aussie remains the US CPI data and the speech by the Reserve Bank of Australia (RBA) Governor, Philip Lowe, scheduled on Wednesday.

AUD/USD: Technical levels to consider