AUD/USD trades at daily lows around 0.7100 amid risk-off market mood ahead of the Fed

• The Australian dollar continues to fall for the second day in a row, sliding 0.30%.
• The US PPI increased by almost 10%, the most in eleven years, as pressure mounts on the Fed.
• On Wednesday, US Retail Sales and the Federal Reserve monetary policy decision would guide the AUD/USD pair.

The Australian dollar grinds lower against the greenback during the New York session, trading at 0.7103 at the time of writing. On Tuesday, the market sentiment is tepid, as investors await the Federal Reserve monetary policy decision. Additionally, the odds of the US central bank reducing its bond-purchasing program faster as estimated increased when the US Bureau of Labor Statistics (BLS) reported that prices paid for producers rose the most in eleven years.

The AUD/USD tumbled below the 0.7100 figure in the overnight session, as Monday’s Wall Street market mood influenced Asian markets. However, upbeat news that two doses of the Pfizer BioNTech vaccine would provide 70% protection against the COVID-19 Omicron strain improved the market mood during the European session, pushing the pair towards 0.7135.

However, as the American session began, positive US macroeconomic data spurred demand for the greenback, which pushed the AUD/USD back towards the daily lows.

On Tuesday, the US Producer Price Index for November rose to 9.6% annually, higher than the 9.2% expected. The so-called Core PPI, excluding volatile items like food and energy, increased by 7.7%, higher than the 7.2% foreseen by analysts.

On Wednesday, the Australian economic docket will unveil the Westpac Consumer Confidence for December. In the US docket, Retail Sales for November are expected at 0.8%, while excluding Autos, the consensus estimates are at 1%. Later on, the Federal Reserve monetary policy decision, with consensus expecting a reduction of $30 billion on its bond asset purchases, beginning in January 2022.