AUD/USD looks vulnerable near 0.6600 as US labor market solidifies further, China CPI eyed

• AUD/USD is struggling to recapture the immediate resistance of 0.6600 amid the risk-off mood.
• A decline in China’s CPI might force the PBoC to infuse more liquidity into the economy.
• Solid US Employment data confirms that fears of stubborn inflation among Fed policymakers were real.

The AUD/USD pair is displaying a back-and-forth action below the round-level resistance of 0.6600 in the Asian session. The Aussie asset looks vulnerable around the same as deepening fears of a recession in the United States amid expectations of higher rates by the Federal Reserve (Fed) have solidified the risk-aversion theme.

S&P500 futures are showing nominal losses after a weak recovery move. It seems that the dead cat bounce move by the 500-US stocks basket is fading away. The US Dollar Index (DXY) has turned sideways above 105.20 after a mild correction, however, the upside looks favored amid upbeat United States Employment data.

The solid addition of fresh payrolls in the US labor market in February due to rising demand has confirmed that fears of stubborn inflation among Fed policymakers were real. The US Automatic Data Processing (ADP) has reported an addition of 242K jobs in February, higher than the expectations of 200K and the former release of 119K. Therefore, Fed chair Jerome Powell cited “Fed is prepared to announce more rates to bring down inflation.”

Investors will get more clarity on the US labor market after the release of the US Nonfarm Payrolls (NFP) data, which will release on Friday. Apart from that, the release of the Unemployment Rate and the Average Hourly Earnings data will be of utmost importance.

After the fifth consecutive 25 basis points (bps) rate hike by the Reserve Bank of Australia (RBA) and a consideration of a policy-tightening pause led by a one-time blip in the monthly Consumer Price Index (CPI) by RBA Governor Philip Lowe, the Australian Dollar has faced immense heat.

Now, investors are shifting their focus toward China’s Consumer Price Index (CPI) (Feb) data. Annual China’s CPI is expected to decline to 1.9% from the prior release of 2.1%. On a monthly basis, China’s CPI has been trimmed to 0.2% from the former release of 0.8%. Lower inflation might force China’s administration and the people’s Bank of China (PBoC) to infuse more liquidity into the economy.