AUD/USD oscillates below 0.6400 as investors await US Inflation

• AUD/USD consolidates below 0.6400 ahead of US inflation.
• Economists see monthly and annual core CPI grow at a steady pace of 0.3% and 4.1%, respectively.
• Q3 Wage Cost Index is seen growing at a stronger pace of 1.3%.

The AUD/USD pair trades sideways in a narrow range below 0.6400 as investors await the United States inflation data for October. The Aussie asset struggles for a direction as the US inflation data will provide clarity on whether the Federal Reserve (Fed) will advocate for raising interest rates further.

S&P500 futures added some gains in the European session, portraying some improvement in the risk appetite of the market participants. The US Dollar Index (DXY) dropped straight for the third trading session to near 105.50 amid anxiety ahead of the inflation data.

Economists have forecasted that monthly headline inflation rose at a nominal pace of 0.1% against the higher growth rate of 0.4%. The annual headline Consumer Price Index (CPI) softened to 3.3% against a 3.7% reading from September. Monthly and annual core CPI grew at a steady pace of 0.3% and 4.1%, respectively.

The release of the US inflation data will provide guidance on the monetary policy action by the Fed. Last week, Fed Chair Jerome Powell said that he is not sure whether current monetary policy is sufficiently restrictive to tame price pressures.

On the Australian Dollar front, investors await the Q3 Wage Price Index, which will be released on Wednesday. As per the consensus, the labor cost index grew at a stronger pace of 1.3% against a 0.8% gain in the previous quarter.

Stronger growth in the labor cost index would prompt expectations of one more interest rate increase by the Reserve Bank of Australia (RBA) ahead. Last week, the RBA raised interest rates by 25 basis points (bps) to 4.35% as expected.