AUD/USD trades sideways near the key resistance level of 0.6400 area during the early Asian session on Monday. Meanwhile, the US Dollar Index (DXY), a
, whose term ends on September 18, stated in a speech that he had focused on the possibility that wages and profits could exceed levels consistent with inflation returning to target in late 2025. He added that the Unemployment Rate can sustain near 40-year lows and wage growth is strong.
About last week’s data, the Australian Gross Domestic Product climbed 0.4% in the second quarter of 2023 from 0.2% in the first quarter and better than the estimations of 0.3%. The annual second-quarter GDP increased by 2.1%, compared to a 2.3% rise in the first quarter and beating the expectations of a 1.7% gain.
Investors are concerned about the sluggish demand as well as the deflation in China. The Chinese government has denied that the nation has entered a period of deflation as it technically requires three consecutive monthly declines in consumer prices. However, CPI has hovered just above zero since the beginning of the year. On Saturday, data released from China’s National Bureau of Statistics reported that the Chinese for August came in at 0.1% YoY versus a 0.
On the US Dollar front, the Federal Reserve could be compelled by the upbeat US data released last week to maintain the interest rate at its September meeting, but the markets anticipated one more 25 basis point rate increase by the end of the year. According to the CME FedWatch Tool, the markets have priced in a 93% chance of a rate hold at the September meeting and a 43.5% chance of a rate hike at the November meeting.
Moving on, Wednesday's US Consumer Price Index for August will provide market participants with additional information. The monthly figure is expected to rise by 0.5% while the core monthly figure is expected to remain at 0.2%. On the Australian docket, the Australian employment data will be due on Thursday. On Friday, the Chinese Industrial Production and Retail Sales will be released. Traders will take cues from these figures and find trading opportunities around the AUD/USD pair.