AUD/USD grinds higher past 0.6900 on cautious optimism ahead of US inflation

• AUD/USD picks up bids to print two-day uptrend, mildly bid of late.
• Upbeat Aussie trade data joins mixed China inflation to put a floor under the prices.
• Softer US Treasury bond yields, Fed’s hesitance and downbeat market consensus for US CPI favor bulls.

AUD/USD clings to mild gains around 0.6920, despite lacking follow-through, amid slightly positive market sentiment during early Thursday. In doing so, the Aussie pair cheers the early-day economics from Australia and China, as well as hopes of softer US inflation, amid a cautious mood ahead of the key US Consumer Price Index (CPI) for December.

That said, Australia’s Trade Balance improved to 13,201M in November versus 10,500M market forecasts and 12,217 previous readings. Further details suggest that the Imports reprint 1.0% contraction while the Exports improved to 0.0% versus -1.0% prior during the stated month.

On the other hand, China’s headline CPI YoY grew 1.8% YoY in December versus 1.8% expected and 1.6% prior whereas the Producer Price Index (PPI) marked -0.7% figures compared to -1.3% previous readings and -0.1% market forecasts.

Elsewhere, risk-positive headlines from China’s National Development and Reform Commission (NDRC) also seemed to have put a floor under the AUD/USD prices, due to Aussie-Sino ties. “China has a solid basis to keep prices stable in 2023,” said NDRC earlier on Thursday.

Additionally, Federal Reserve Bank of Boston President Susan Collins’ support for smaller rate increases and market forecasts of a softer US CPI data for December, expected 6.5% YoY versus 7.1% prior, also favor the AUD/USD buyers. That said, the Core CPI, namely the CPI ex Food & Energy, will be observed closely for clear directions and is expected to be 5.7% versus 6.0% prior.

Technical analysis

AUD/USD pair’s ability to defend the previous week’s upside break of the 200-DMA and a downward-sloping trend line from June, respectively around 0.6830 and 0.6815, keeps the buyers hopeful of crossing a two-month-old ascending resistance line, around 0.6960 at the latest.