AUD/USD eyes to regain 0.7300 on firmer China inflation, easing fears over Ukraine

• AUD/USD picks up bids to refresh intraday high on upbeat China CPI, PPI for February.
• RBA’s Lowe hints at a rate-hike during late 2022 but refrains from entertaining hawks.
• Risk appetite improves as Ukraine dumps NATO membership goal, US-Venezuela also favored sentiment of late.
• Qualitative catalysts will be crucial, RBA’s Debelle will be important as well.

AUD/USD justifies firmer prints of China’s headlines inflation data during Wednesday’s Asian session. Also favoring the risk barometer is the recently improving market sentiment.

That said, China’s Consumer Price Index (CPI) rose past 0.8% forecast to reprint 0.9% prior figures while the Producer Price Index (PPI) crossed 8.7% market consensus with 8.8% YoY figures, versus 9.1% previous readouts.

Earlier in the day, March month’s Westpac Consumer Confidence for Australia, -4.2% versus -1.1% expected and -1.3% prior, also challenged the AUD/USD buyers.

Before that, Reserve Bank of Australia (RBA) Governor Philip Lowe spoke at the Australian Financial Review Business Summit. The policymaker initially said, “Plausible the cash rate will be increased later this year,” before stating, “Closer to point where inflation sustainably in the target range, but not there yet.”

It’s worth noting, however, that a pullback in commodity prices, mainly due to receding risks emanating from Ukraine, seems to offer a major challenge to the AUD/USD pair buyers.

That said, “In a nod to Russia, Ukraine is reportedly no longer insisting on NATO membership,” reported AFP on Tuesday, which in turn became the major risk-on catalyst. The news also joins the confirmation of the first humanitarian corridor in Ukraine to tame the market’s pessimism. Additionally favoring the risk appetite, as well as negatively affecting silver’s safe-haven appeal is Venezuela’s freeing of the American prisoner and the US hint of easing sanctions afterward.

On the contrary, Russia may not cheer Kyiv’s intention to dump NATO membership goal as Moscow may fear the enemy to join the European Union (EU), which in turn demolishes President Vladimir Putin’s unsaid target of putting Kremlin-controlled leader in Ukraine.

Amid these plays, the US 10-year Treasury yields fail to extend the previous day’s positive performance around 1.84%, down 1.3 basis points (bps) whereas the S&P 500 Futures rise 0.10% on a day at the latest.

Looking forward, comments from RBA Deputy Governor Guy Debelle will offer immediate directions to the AUD/USD prices. However, major attention will be given to headlines concerning the Russia-Ukraine story.

Technical analysis

The Aussie pair’s clear U-turn from the one-year-old descending trend line, followed by the 200-DMA break and the retreat of the MACD line keep the AUD/USD sellers hopeful.

On its downside, AUD/USD may aim for the 100-DMA and the 50-DMA levels, around 0.7230 and 0.7190 in that order, as short-term supports. Alternatively, recovery moves remain elusive below the 200-DMA level of 0.7317.