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AUD/USD gains ground around 0.6687 on the weaker USD.
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The December PPI figure showed a cooler headline figure, while the core index was flat.
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China’s Consumer Price Index (CPI) dropped 0.3% from a 0.5% fall seen in November, below the 0.4% decline expected.
The AUD/USD pair opened the new week on a positive note in the early Asian session on Monday. Expected US Producer Price Index (PPI) data on Friday dragged the US Dollar lower and lifted AUD/USD. A long weekend for the US with Martin Luther King Jr. Day on Monday is likely to calm markets in view of US economic data. The pair is currently trading near 0.6687, up 0.06% on the day.
The US Bureau of Labor Statistics released Friday that December’s headline PPI figure was 1.0% YoY vs. 0.8% previously, and core PPI rose to 1.8% YoY from 2.0% in November. Both readings were below market consensus. On a monthly basis, the headline and core PPI indices were flat at -0.1% and 0% respectively. In response to the data, the greenback and US Treasury bond yields edged lower.
According to the CME FedWatch tool, the market has priced in an 86% chance of a rate cut by March, with the overall 2024 easing cycle priced at about 166 basis points (bps), compared to the 75bps estimated by the Fed dot plot.
On the other hand, China’s Consumer Price Index (CPI) fell to 0.3% from a 0.5% decline seen in November, below expectations for a 0.4% decline. Additionally, China’s December exports exceeded estimates, but the world’s second-largest economy’s total trade fell in 2023. Nevertheless, the impact of these figures was limited as market participants focused on signs of cooling inflation in the US.
Looking ahead, traders will monitor Australian Westpac consumer confidence and TD Securities inflation data for January, on Tuesday. On the US docket, the NY Empire State Manufacturing Index will be released on Tuesday and December retail sales will be released on Wednesday. This statistic can give a clear direction to the AUD/USD pair.
AUD/USD
