• AUD/USD starts the day on the backfoot despite softer US CPI.
  • AUD/USD is at risk of another dip lower below 0.72 in the coming weeks.

AUD/USD is trading 0.63% lower having fallen from a 0.7373 high to a low of 0.7313 and sits near 0.7320 at the time of writing. 

US equity markets softened following weaker than expected US inflation data although the easing in inflation may result in the Federal Reserve being more cautious about tapering support. The headline index rose 0.3% MoM vs expectation of a 0.4% gain and was the lowest monthly increase since January. This could give rise appetite a lift in the coming days ahead of next week’s Fed meeting.

The S&P 500 was down 0.57% while the Dow Jones was down 0.84% by the close. In Europe, the Euro Stoxx 50 lifted 0.1% but the FTSE 100 fell 0.5%. The US 10-year was 6bps lower at 1.27%. The CRB index was up 0.15%.

As for other data, the Jobless Claims was watched and reduced by 58,600 in August. The 3-month average unemployment rate eased to 4.6% in July (from 4.7%). ”The furlough scheme concludes at the end of September, and as at the end of July 5.4% of employees were on this scheme. When the furlough scheme ends there is expected to be a wave of redundancies and increased underemployment,” analysts at ANZ Bank explained.

Eyes on 0.72 area for AUD/USD

Meanwhile and locally, a dovish central bank, a Treasurer who is mindful of the need of Australian companies to diversify from trade with China, the fall in iron ore prices on the back of Chinese steel production curbs and heavy Covid related restrictions should keep investors wary, analysts at Rabobank warned.”In our view, AUD/USD is at risk of another dip lower below 0.72 in the coming weeks. This assumes the USD can stay on the front foot.”