AUD/USD climbs above 0.6920 on upbeat Australian Trade Balance data

• AUD/USD has picked strength and has scaled above 0.6920 after the release of solid Aussie Trade Balance data.
• Only a surprise rise in US inflation could provide a cushion to the US Dollar Index.
• The Australian Dollar may display power-pack action after the release of China’s inflation data.

The AUD/USD pair has climbed above 0.6920 as the Australian Bureau of Statistics has reported stronger-than-projected monthly Trade Balance (Nov) data. The economic data has jumped to 13,201M vs. the consensus of 10,500M and the former release of 12,217M.

Earlier, the Aussie asset displayed topsy-turvy moves as investors are restricting themselves from building significant positions before the release of the United States Consumer Price Index (CPI) data.

S&P500 futures are showing marginal selling pressure after back-to-back firmer bullish sessions, portraying anxiety among investors ahead of the US inflation data. The US Dollar Index (DXY) continued its struggle around 103.00 amid weak trading activity. Meanwhile, the 10-year US Treasury yields have shown a recovery move and have rebounded above 3.56%.

Analysts at RBC Economics expect annual United States consumer price growth to slow significantly in December to 6.3% from 7.1%, recorded in November. The steep decline in headline price growth is largely thanks to a significant drop in energy prices. They expect ‘core’ (excluding food & energy products) price growth to slow to 5.6% YoY in December from 6.0% in October.

The US Dollar Index has witnessed carnage in the past few weeks and only a surprise rise in inflation figures could provide a cushion ahead. On a broader note, analysts at Wells Fargo see inflation declining to 2.2% YoY by year-end.

Going forward, the Australian Dollar will witness action after the release of China’s CPI data. According to the estimates, annual CPI (Dec) is set to improve to 1.8% from the former release of 1.6%. While the monthly figure may contract by 0.1% against the prior release of -0.2%. Also, the Producer Price Index (PPI) could contract by 0.1%.