AUD/USD bulls cheer softer US data to approach 0.6500, Australia inflation eyed

• AUD/USD edges higher after rising the most in a week.
• US consumer sentiment, employment signals challenge Fed hawks and weigh US Dollar, yields.
• RBA’s Governor-Designate Bullock’s hawkish comments also keep Aussie pair buyers hopeful.
• Australia Monthly CPI, housing signals will entertain traders ahead of early signals for US employment, inflation and growth.

AUD/USD seesaws at the weekly high around 0.6480 after posting the stellar run-up on downbeat US data. It’s worth noting that the hawkish comments from Reserve Bank of Australia (RBA) Governor-Designate Michelle Bullock also favor the Aussie pair buyers as markets brace for the key Australia inflation data on early Wednesday.

On Tuesday, the Reserve Bank of Australia (RBA) Governor-Designate Michelle Bullock crossed wires while speaking at the Sir Leslie Melville Lecture at the Australian National University, in Canberra. In doing so, the policymaker initially conveyed too high inflation as her priority as Governor before flagging hopes of raising rates again. However, RBA’s Bullock also showed readings to watch data carefully for further decision-making.

On the other hand, the US Conference Board's (CB) Consumer Confidence Index slumped to 106.10 for August from a downwardly revised 114.00 prior (from 117.0), versus 116.0 market forecasts. That said, the US JOLTS Job Openings slumped to the lowest since March 2021, to 8.827M for July versus 9.465M expected and 9.165M prior (revised from 9.582). Additionally, the US Housing Price Index eased to 0.3% MoM for June from 0.7% prior and 0.2% while the S&P/Case-Shiller Home Price Indices improved to -1.2% YoY from -1.7% previous readings and -1.3% market forecasts.

With the mostly downbeat US data, fears of the Fed’s September policy pivot escalate as the CME’s FedWatch Tool signals 16% chance of a rate hike versus 20% prior. The same propelled Wall Street and weighed on the US Treasury bond yields, as well as the US Dollar.

It’s worth noting, however, that a lack of impressive updates from the US-China talks in Beijing and fears of the International Monetary Fund’s (IMF) pause to the easy-lending prod the AUD/USD bulls, apart from the pre-data anxiety.

Moving on, Aussie housing numbers may entertain the pair traders but major attention will be given to the Australia Monthly Consumer Price Index (CPI) for July, expected to ease to 5.2% from 5.4% prior. Should the numbers ease, the AUD/USD may have a reason to pare the latest gains. It should be noted that strong prints of Aussie inflation don’t mean the pair’s permanent rally as the US ADP Employment Change, the final readings of the US second quarter (Q2) Gross Domestic Product (GDP) and the Personal Consumption Expenditure (PCE) are on the calendar. Should these early signals of the US employment and inflation rally, the US Dollar may pare the latest losses.

Also read: Australian Inflation Preview: Surprises in Monthly Consumer Price Index to rock the Aussie

Technical analysis

A daily closing beyond six-week-old falling resistance line, around 0.6430 by the press time, keeps the AUD/USD pair buyers hopeful.