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AUD/USD remains capped below the 0.6400 mark in early Tuesday.
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The New York Fed’s 1-year and 5-year inflation outlooks eased to 3.57% and 2.72%, respectively.
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The US Consumer Price Index (CPI) will be the highlight on Tuesday.
The AUD/USD pair recovered some lost ground but remained limited below the 0.6400 psychological mark during the early Asian session on Tuesday. Markets turned cautious ahead of the US Consumer Price Index (CPI), later on Tuesday. This event may signal inflation’s progress towards its 2% target. At press time, AUD/USD is trading near 0.6375, having lost 0.05% on the day.
Meanwhile, the US Dollar Index (DXY), an index of the USD’s value measured against a basket of six world currencies, edged closer to 105.65 after retreating from 106.00. US Treasury bond yields edged lower, with the 10-year yield falling to 4.63% and the 2-year yield to 5.03%.
The New York Fed’s survey of consumer expectations showed that the 1-year and 5-year inflation outlooks fell to 3.57% and 2.72%, respectively. Meanwhile, the US government reported a budget deficit of $66 billion in October, compared to a deficit of $87 billion in the same month last year. Tuesday’s spotlight will be US inflation data. The Consumer Price Index (CPI) is expected to rise 0.1% in October, and a measure of core inflation is expected to remain at 4.1%. These figures may convince the Federal Reserve (Fed) to tighten further, as FOMC views are confirmed by the data.
On the Australian front, Reserve Bank of Australia (RBA) Assistant Governor (Economics) Marion Kohler said the decline in inflation would be slower than previously thought due to still high levels of domestic demand and strong labor and other cost pressures. Kohler also said that a tougher policy is needed to combat high inflation. Markets expect the RBA to raise rates further in the first half of next year.
Looking ahead, market players will monitor Australia’s Westpac Consumer Confidence and National Australia Bank’s business surveys. Also, US CPI data will be due on Tuesday. Later this week, the Australian Q3 Wage Price Index will be out on Wednesday, and the Australian Employment Report will be released on Thursday.
AUD/USD
