AUD/USD stays above 0.70 handle as USD fails to capitalize on inflation data
- Core PCE Price Index in May stays unchanged at 1.6% as expected.
- US Dollar Index stays in the negative territory above the 96 mark.
- Investors remain on the sidelines ahead of this weekend's critical trade talks.
The AUD/USD pair rose to its highest level in more than two weeks at 0.7017 earlier today and has been moving sideways since. Today's data from the United States failed to trigger a market reaction and the pair was last seen trading at 0.7008, where it was virtually unchanged on a daily basis.
The U.S. Bureau of Economic Analysis today reported that the core Personal Consumption Expenditures (PEC) Price Index, the Fed's preferred gauge of inflation, stayed unchanged at 1.6% on a yearly basis in May to meet the market expectation. Underlying details of the publication revealed that personal spending and personal income increased by 0.4% and 0.5%, respectively. The US Dollar Index essentially ignored these figures and now waits for the next batch of data at 96.12, losing 0.1% on the day.
Nevertheless, investors are unlikely to make large bets ahead of the critical meeting between U.S. President Trump and Chinese President Xi in Japan this weekend. Any positive headlines hinting at the possibility of the U.S.-China trade conflict coming to an end could help antipodeans continue to gather strength against the greenback.
Previewing this event, "China could be ready to put restrictions on rare earth exports to the US unless the ban is lifted. That would be a way to retaliate against the US for the attack on Chinese tech. China has not yet retaliated but may have chosen to wait for the G20 to see if Xi could get Trump to lift the ban first,” Danske Bank analysts said.
Technical levels to consider