- Business confidence in Australia improves in May.
- US Dollar Index struggles to stay in the positive territory.
- Coming up: Speech by RBA’s Kent and Chinese inflation data.
After staging a technical correction of last week’s upsurge and closing the day 35 pips lower on Monday, the AUD/USD pair pushed lower earlier in the day on Tuesday but rebounded during the American trading hours to turn flat on the day near 0.6960.
The data published from Australia on Tuesday revealed that the NAB’s Busines Confidence Index jumped to 7 in May from 0 in April to help the AUD limit its losses.
In the early NA session, the U.S. Bureau of Labor Statistics announced that the Producer Price Index (PPI) on a yearly basis in May slumped to 1.8% to fall short of the market expectation while the core PPI, which excludes volatile food and energy prices, ticked down to 2.3% to match analysts’ estimates. Although the initial marketreaction helped the greenback gather strength, the currency struggled to preserve its gains as the 10-year T-bond yield turned negative on the day to retrace its 2% daily increase.
President Trump, once again, criticised the Fed’s monetary policy Tuesday to hurt the buck. Additionally, during an interview with CNBC, Trump’s economic advisor Kudlow argued bond markets were saying that the Fed went “too far.” After rising toward the 97 handle, the DXY turned south and was last down 0.13% on the day at 96.65.
In the Asian session on Wednesday, Reserve Bank of Australia (RBA) Assistant Governor Christopher Kent will be delivering a speech. Markets will also be watching the inflation data from China as well.
Technical levels to consider
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