September 12, 2022 02:38 AM ET
By: AnalysisWatch
The AUD/USD pair has been showing back and forth movement in a slightly higher range of 0.6824-0.6852 since the start of the Tokyo session. The asset has moved sideways after hitting a new high in September at 0.6877. Following an upward break of the consolidation, the major is expected to continue its advance.
Investors are supporting the Aussie's gains against the greenback due to lower U.S. inflation expectations. A drop in the consensus for the U.S. Consumer Price Index (CPI) data, which will be released Tuesday, is seen at 8.1%, lower than the previous release of 8.5%. The core CPI, which excludes fossil fuels and food prices, is seen as higher by 10 basis points (bps) at 6%. Such a move will delight households who are facing rising wages.
There is no doubt that consecutive declines in the overall U.S. consumer price index (CPI) warrant depletion signals. Lower U.S. gasoline prices and falling interest rates have led to lower inflation expectations. The odds of a rate hike by the Federal Reserve (Fed) at the September policy meeting remain strong. However, the extent of the hawkish tone may be reduced as the Fed will have the luxury of raising rates modestly.
On the Australian front, investors await the release of employment data. The consensus is for the unemployment rate to remain steady at 3.4%. The key data point will be the change in employment, which is seen as extremely high at 50,000 versus 40.9,000 job cuts.