AUD/USD stabilizes above 0.6400 as US Dollar retreats ahead of FOMC minutes

• AUD/USD manages to shift auction above 0.6400 amid correction in the US Dollar.
• A stronger US PPI report has prompted expectations of a hot consumer inflation report for September.
• Investors await the FOMC minutes which will provide a detailed explanation behind a steady rate decision.

AUD/USD seems stabilized above the round-level resistance of 0.6400 in the early New York session. The Aussie asset strengthens as the US Dollar falls back after the release of the stronger Producer Price Index (PPI) report for September.

The S&P500 opens on a bullish note as US Treasury yields drop from their multi-year highs. The 10-year US Treasury yields have dropped to 4.6%, resulting in an improvement in the risk appetite of the market participants.

The US Dollar Index (DXY) drops below 105.60 though stronger producer inflation has prompted expectations of a hot consumer inflation report for September, which will be published on Thursday at 12:30 GMT. The US Bureau of Labor Statistics reported the annual core PPI at 2.7%, accelerated from expectations of 2.5% and the former release of 2.3%. On a monthly basis, headline and core PPI rose by 0.5% and 0.3% respectively.

Meanwhile, neutral commentary from Federal Reserve (Fed) policymakers has pushed the US Dollar on the backfoot. Rate-setters commented that higher yields could reduce the pace of spending and investment. Therefore, the Fed could avoid raising rates further.

Going forward, the focus will be on the Federal Open Market Committee (FOMC) minutes for the September monetary policy, which will provide a detailed explanation behind a steady rate decision.

On the Aussie front, rising expectations of one more interest rate increase from the Reserve Bank of Australia (RBA) in the remainder of 2023 have improved the appeal of the Australian Dollar. Improved oil price outlook due to deepening Middle East tensions could elevate inflationary pressures ahead.