The AUD/USD pair has climbed to 0.6620, driven by a positive market mood and a weakening US Dollar. Despite the release of stubborn US PPI data, the appeal of the US Dollar has failed to gain traction.
US Dollar Vulnerability
The US Dollar Index (DXY) has dipped towards the crucial support level of 105.00 against a basket of major currencies. The modest growth in both annual and core PPI data in the US has not been sufficient to shore up the Greenback, as higher producer prices hint at underlying inflationary pressures.
Investor sentiment remains optimistic, with the S&P 500 showing a slightly bullish open. The anticipation of the US Consumer Price Index (CPI) data release has not deterred market participants. Hotter-than-expected US inflation figures could potentially alter expectations for Fed rate cuts in the coming months.
Looking ahead, the focus will shift to Australia’s Wage Price Index data for Q1. Forecasts suggest a steady growth of 0.9% quarterly and 4.2% annually. Strong wage inflation figures could pose upside risks to inflation, prompting the Reserve Bank of Australia (RBA) to maintain a more hawkish stance on interest rates.
The AUD/USD pair has advanced amidst a backdrop of positive market sentiment and a weakening US Dollar. While US inflation data remains a key driver of market expectations, the focus on Australian wage inflation figures adds another dimension to the economic outlook. Traders will continue to monitor these developments closely for potential trading opportunities in the currency markets.