During Thursday’s Asian trading session, the AUD/USD pair demonstrated a limited trading range, consolidating its recent decline prompted by robust US CPI data. Hovering above the psychological level of 0.6500, spot prices exhibited minimal movement following the release of China’s inflation data.
According to the National Bureau of Statistics, China’s consumer inflation witnessed a sharper-than-anticipated decline of 1% in March compared to the previous month’s increase of 1%. On an annual basis, the headline CPI decelerated to 0.1% from the prior month’s 0.7%, falling short of the projected 0.4% rise. Moreover, the Producer Price Index, indicating wholesale prices at the factory gate, recorded a 2.8% drop year-on-year, marking the 18th consecutive month of decline and underscoring persistent deflationary pressures.
These figures overshadowed an uptick in Australian consumer inflation expectations for April, rising to 4.6% from the previous 4.3%, failing to significantly bolster the Australian Dollar (AUD).
Meanwhile, the US Dollar (USD) edged lower, driven by profit-taking following a substantial surge to its highest level since November 14. Despite this retracement, a meaningful corrective decline in the USD remains unlikely amid expectations that the Federal Reserve (Fed) will defer interest rate cuts due to sticky inflation. Furthermore, a prevailing cautious sentiment in equity markets is poised to bolster the safe-haven appeal of the USD, thereby restraining the risk-sensitive Australian Dollar (AUD). Consequently, traders adopting an aggressive bullish stance are advised to exercise caution in light of these factors.
