AUD/USD Oscillates Below 0.6300 Ahead Of US Inflation Data
The AUD/USD pair traded in a tight range below the key 0.6300 level during the European session on Wednesday (3/12). The Australian currency pair consolidated as investors await the US Consumer Price Index (CPI) data for February, due to be published at 12:30 GMT.
Investors are looking to the US inflation data for fresh cues on whether the Fed will cut interest rates at its May meeting. At its policy meeting next week, the Fed is almost certain to keep interest rates unchanged at a range of 4.25%-4.50%. According to the CME FedWatch tool, there is a 42% chance that the central bank will cut rates in May, up significantly from the 10.4% seen a month ago.
The US CPI report is expected to show that headline inflation rose at a slower pace of 2.9% year-on-year, compared to a 3% increase seen in January. In the same period, core CPI – which excludes volatile food and energy prices – is expected to slow to 3.2% from the previous reading of 3.3%.
Ahead of the US inflation data, the US Dollar Index (DXY) edged higher from a four-month low of 103.35. The US dollar (USD) remained weak as investors worried about the US economic outlook under President Donald Trump. On Tuesday, comments from US Commerce Secretary Howard Lutnick suggested that Trump’s policies were cause for concern as they could lead to a recession.
Meanwhile, gains in the Australian Dollar (AUD) remained limited amid concerns that the US-China trade war could lead to a sharp decline in Australian business activity, given that Australia is heavily dependent on exports to China. The US has already imposed a 20% tariff on imports from China.
Source: FXStreet
