AUD/USD remains trading in the green, extending its rally to four straight days, but gave back some of its earlier gains following an inflation report in the United States (US). Data released from Australia in the Asian session lifted the pair, but at the time of writing, it exchanges hands at 0.6783, up 0.55%.
Inflation slowdown gives room for Fed's pause; AUD/USD nears weekly high
The US Bureau of Labor Statistics (BLS) released May inflation figures, with the Consumer Price Index (CPI) expanding 4% YoY, below estimates of 4.1% and the prior’s month 4.9%. Excluding volatile items, the so-called core CPI stood at 5.3% YoY, aligned with estimates, though it ticked 0.2% lower than April’s data.
Therefore, as inflation cools, the Federal Reserve (Fed) can skip a rate hike in June to check the economic status before the July meeting. Money market futures estimate the Fed would raise rates 25 basis points (bps) to 5.25%-5.50% next month, as shown by the CME FedWatch Tool, with chances standing at 58.2%, higher than a week ago.
After the inflation release, the AUD/USD edged towards a five-week high of 0.6802 before making a U-turn as investors digested US data. Nevertheless, the AUD/USD has resumed its uptrend, approaching the 0.6790 area, shy of the 0.68 handle.
On the Aussie (AUD) front, Consumer Confidence for June, revealed by Westpac, printed a marginal gain of 0.2%, above estimates of 0%, but smashed May figures of -7.9%. Nevertheless, it should be said the reading remains at soft levels, with Australians hurt by the high inflationary pressures and the Reserve Bank of Australia (RBA) tightening cycle
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