- Dovish RBA exerted some pressure, upbeat Chinese CPI helped limit losses.
- A subdued USD demand provided an additional boost and remained supportive.
The AUD/USD pair quickly reversed an early Asian session dip, with bulls making a fresh attempt to build on the recent recovery move further beyond the 0.6800 round figure mark.
Upbeat Chinese CPI, weaker USD helped offset dovish RBA
The pair extended overnight modest pullback from weekly tops and dipped further on Friday in reaction to dovish comments by RBA Governor Lowe, reiterating the central bank is prepared to adopt unconventional policy measures if required.
This was followed by the release of RBA’s quarterly monetary policy statement, wherein the Australian central bank lowered its inflation and economic growth forecasts and showed readiness towards further easing of the monetary policy.
The downtick, however, turned out to be short-lived, rather was quickly bought into following the release of upbeat Chinese consumer inflation figures, showing that the headline CPI rose 2.8% on yearly basis in July as against 2.7% expected.
On the other hand, Producer Price Index (PPI) came in weaker than expected and did little to provide any meaningful impetus to the China-proxy Australian Dollar, albeit the negative reading was largely offset by a subdued US Dollar demand.
The USD bulls held on the defensive in the wake of some renewed weakness in the US Treasury bond yields and the US President Donald Trump’s latest criticism on Thursday over the Federal Reserves monetary policy stance.
Moving ahead, Friday’s US economic docket – featuring the release of PPI figures, might further influence the USD price dynamics and produce some short-term meaningful trading opportunities later during the early North-American session.
Technical levels to watch
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