AUDUSD drops amid mixed Australia data, US-China headlines

Traders remain indecisive on early Thursday as traders reassess the Fed signals amid downbeat US inflation data and better-than-forecast US Retail Sales, not to forget Fed Chair Jerome Powell’s defense of the hawkish policy. Also affecting the market sentiment are the updates from a meeting between US President Joe Biden and his Chinese counterpart Xi Jinping.

With this, the US Dollar pares the weekly losses while prices of Gold recover. It’s worth noting, however, that Crude oil remains depressed and exerts downside pressure on the Antipodeans. Further, the US stock futures and the Asia-Pacific shares trade mixed even as the Wall Street benchmarks closed positive.

Elsewhere, NZDUSD and AUDUSD drop the most among the G10 currencies while EURUSD, USDJPY and USDCHF remain lackluster. That said, the GBPUSD also drops amid fears of the UK recession and a less hawkish tone of the Bank of England (BoE) officials.

Talking about cryptos, BTCUSD and ETHUSD pare the recent gains amid mixed clues about the future demand of the spot Bitcoin and Ethereum ETFs.

Following are the latest moves of the key assets:

• Brent oil prints three-day downtrend near $81.00 at the latest.
• Gold price picks up bids to reverse the previous day’s pullback from weekly top, mildly bid near $1,965 as we write.
• USD Index extends the previous day’s rebound from a 2.5-month-low to near 104.50 by the press time.
• Wall Street closed with mild gains but the Asia-Pacific stocks traded mixed. That said, equities in Europe and the UK begin the day with minor gains.
• BTCUSD and ETHUSD both print mild losses to around $37,500 and $2,060 at the latest, paring the previous day’s heavy gains.

Dicey markets help the US Dollar…

After the softer prints of the US Consumer Price Index (CPI) drowned the US Dollar earlier in the week, the firmer readings of the US Retail Sales allowed the Greenback bears to take a breather. It should be noted that the US Producer Price Index (PPI) also eased the previous day and capped the USD’s recovery.

In addition to the softer US inflation and mixed consumer-centric data, the upbeat prints of China statistics also helped improve the mood and weighed on the US Dollar earlier in the week. Additionally, the risk-positive updates from a meeting between US President Joe Biden and his China counterpart Xi Jinping tried to favor the optimists.

Earlier in the day, Xi said China is ready to be a partner and friend of the US. On the same line, China's National Development and Reform Commission (NDRC), the state planner, mentioned its intentions to increase efforts to attract foreign investment and to improve consumption among low and mid-level income groups. However, Beijing’s push for Washington’s exit from Taiwan matter and a few trade tussles appear tough nuts to crack for the policymakers before suggesting upbeat US-China ties, which in turn puts a floor under the US Dollar. Furthermore, the US Senate passed a stop-gap funding bill to avoid the government shutdown and favored the US Dollar’s rebound.

It should be observed Australia’s Consumer Inflation Expectations tried defending the Reserve Bank of Australia’s (RBA) hawkish tone but mixed jobs report from the Pacific major failed to please the AUDUSD bulls.

• Strong buy: USDCAD
• Strong sell: ETHUSD, GBPUSD, Gold
• Buy: USD Index, Nasdaq, USDJPY
• Sell: DAX, FTSE 100, BTCUSD, AUDUSD, EURUSD

Fed talks are in the spotlight…

With most of the scheduled data/events out, traders will seek more clues about the central bankers’ next moves and hence highlight today’s speeches from the officials. Should the “higher for longer” view remain untouched, the traders may witness a rush toward the risk-safety. The same will help the US Dollar to pare weekly loss and weigh on the Crude Oil. However, the Gold price may witness further recovery amid recent optimism surrounding China.

May the trading luck be with you!