AUD/USD Extends Consolidative Price Move Ahead Of US PCE Price Index
The AUD/USD pair extended its sideways consolidative price move for the fourth consecutive day on Friday and remained confined in a range around the 0.6300 mark through the first half of the European session.
The global risk sentiment took a hit in reaction to US President Donald Trump’s new tariffs on imported cars and light trucks, announced on Wednesday. Adding to this, Trump’s upcoming announcement of reciprocal tariffs next week and its impact on the global economy further weighed on investors’ sentiment. This, in turn, was seen as a headwind for the risk-sensitive Australian Dollar (AUD), which, along with a modest US Dollar (USD) uptick, exerted some downward pressure on the AUD/USD pair.
The intraday USD uptick, however, lacked bullish conviction amid growing acceptance that the Federal Reserve (Fed) will soon resume its interest rate cutting cycle. In fact, markets are now pricing in over 65% probability that the US central bank will cut borrowing costs by at least 25 basis points in June amid concerns about the potential economic impact of Trump’s aggressive trade policies. This might hold the USD investors from placing any aggressive bets and support the AUD/USD pair.
Additionally, hopes for more stimulus from China helped limit losses for the Aussie. Traders also seemed reluctant to place any aggressive directional bets and preferred to wait for the release of the US Personal Consumption Expenditures (PCE) Price Index, due later during the North-American session. The crucial US inflation data will influence expectations about the Fed’s future policy path, which in turn, will play a key role in driving the USD demand and provide a fresh impetus to the AUD/USD pair.
Source: FXStreet
