AUD/USD sees little action post-China inflation data release.
The PPI fell more than expected in February while CPI growth missed estimates.
Fed rate cut bets and potential risk recovery may bode well for the Aussie.
AUD/USD remains sidelined near session lows after a below-forecast China inflation data.
The Producer Price Index fell by 0.4% year-on-year in February versus expectations for a 0.3% drop and down from the previous month’s 0.1% reading. Meanwhile, the Consumer Price Index rose 5.2% as expected, following January’s 5.4% rise.
The data hit the wires at 01:30 GMT, but so far, it has failed to move the needle on the Aussie dollar, a proxy for China.
The AUD/USD pair fell from 0.6613 to 0.6573 ahead of the inflation data and was last seen trading around 0.6580. The losses seen before China’s data were likely fueled by the dismal National Australia Bank Business Confidence and Business Conditions number.
Currently, the Aussie dollar is showing resilience to below-forecast PPI or factory-gate prices, possibly because the deterioration was expected due to coronavirus outbreak.
The market looks to have priced in much of the bad news on the China front and is currently focused on developments in the US. The Federal Reserve is expected to cut rates by 50 basis points next week, as financial conditions have deteriorated to levels last seen in 2009.
As a result, the AUD/USD pair could find bids, more so, as the S&P 500 futures are currently reporting over 2% gains. However, if the stocks extend Monday’s decline, the pair could feel the pull of gravity.