AUD/USD Update

The AUD/USD pair has bounced back from recent declines, currently hovering around 0.7090 during the Asian session on Wednesday. This recovery comes after China’s Consumer Price Index (CPI) data revealed a continued strength, showing a 0.2% year-on-year increase for January, following a 0.8% rise in December. Notably, market expectations had placed the CPI growth at around 0.4%. Month-over-month, China’s CPI inflation for January also showed a 0.2% increase, which, while aligning with the previous month, was below the anticipated 0.3%.

In Australia, the Westpac Consumer Confidence Index dipped by 2.6% month-over-month to 90.5 in February, marking the lowest level in a decade. This decline was influenced by the country’s first interest rate hike of 25 basis points in two years. In contrast, the business confidence index from NAB ticked up slightly from a downwardly revised 2 in January to 3, representing the highest level since October.

On the U.S. side, the Census Bureau reported that retail sales remained unchanged at $735 billion in December, following a 0.6% increase in November. This figure fell short of expectations, which had forecast a 0.4% gain. Year-on-year, retail sales saw a 2.4% increase, and total sales for the October to December period rose by 3.0% (±0.4%) compared to the previous year.

As traders await the upcoming U.S. employment report, there is keen interest in its implications for interest rate projections. Expectations suggest that nonfarm payrolls (NFP) could add around 70,000 jobs in January, with the unemployment rate anticipated to remain steady at 4.4% during this time.