AUD/USD bulls attack 0.6800 as downbeat inflation, Fed concerns weigh on US Dollar

• AUD/USD bulls prod six-week-old resistance near 0.6800 after rising the most in two weeks the previous day.
• Strong Aussie employment figures contrast with downbeat US inflation signals to propel the pair.
• Dovish RBA concerns fail to weigh on Aussie pair, Fed policy pivot chatters gain less attention.
• Bulls are likely to keep the reins, more clues of US inflation eyed.

AUD/USD grinds higher around the seven-week top, making rounds to 0.6780 after poking the 0.6800 round figure early Friday in Asia. In doing so, the Aussie pair cheers upbeat Australian inflation data, as well as downbeat US inflation figures and Federal Reserve (Fed) concerns.

That said, Australia’s Employment Change jumps by 53K versus 20K expected and 64.6K prior while the Unemployment Rate remained unchanged versus the expectation of marking the 3.6% figure. Further, the Participation Rate also improved to 66.7% versus market forecasts of reprinting the 66.6% mark. Additionally, Australia’s Consumer Inflation Expectations for April eased to 4.6% YoY versus 5.3% expected and 5.0% prior.

It’s worth noting that mixed data from China failed to weigh on the AUD/USD price amid broad risk-on mood amid receding hopes of the Fed’s further rate hikes, except for May’s 0.25% rate lift. Talking about China data, the headline Trade Balance improved to $88.10B in March versus the $39.2B expected and $116.8B prior whereas Exports grew much faster than Imports during the stated month.

On the other hand, US Producer Price Index (PPI) for March dropped to a four-month low of -0.5% MoM versus 0.0% expected and prior whereas the PPI YoY also declined to 2.7% from 4.9% previous readouts, versus market forecasts of 3.0%. Further, US Initial Jobless Claims rose to 239K versus 232K expected and 228K prior.

Against this backdrop, Wall Street remained firmer and the yields also improved but the US Dollar Index (DXY) dropped to the lowest levels since February. Additionally, the CME’s FedWatch Tool signals a 68% chance of a 0.25% rate hike in March versus 71% marked the previous day.

Given the light calendar ahead of the North American trading session, AUD/USD may remain lackluster at the multi-day high. However, the underlying bullish trend is likely to remain intact considering the market’s optimism and broad US Dollar weakness.

Moving on, US Retail Sales for March, expected to repeat -0.4% MoM figure, precedes the preliminary readings of the US Michigan Consumer Sentiment Index (CSI), likely staying unchanged at 62, to entertain AUD/USD traders. Also important to watch will be the University of Michigan’s (UoM) 5-year Consumer Inflation Expectations, prior 2.9%.

Technical analysis

A six-week-old ascending resistance line near 0.6800 precedes the 100-DMA hurdle of around 0.6805 to challenge the AUD/USD bulls. However, the bears are off the table unless the quote offers a daily closing below the 50-DMA support of around 0.6745.