Anna 
In defiance of weaker-than-expected Australian consumer inflation data on Wednesday, the Australian dollar (AUD) managed to recover recent losses, showcasing resilience amid shifting market dynamics. However, AUD/USD experienced a decline in the prior session as risk aversion favored the U.S. dollar.
Australia’s economic indicators present a mixed narrative, with the consumer price index moderating to 4.3% year-on-year in November, slightly below the market’s anticipated 4.4%, and a dip from the previous figure of 4.9%. This suggests a marginal easing of inflationary pressures within the country.
On a positive note, Australian retail sales (MoM) exhibited growth on Tuesday, pointing towards increased consumer spending. Additionally, monthly building permit data defied expectations for a decline, signaling resilience in the domestic economy.
The focus now turns to Australia’s December trade balance data set to be unveiled on Thursday, with expectations predicting a rise from 7.129 billion to 7.5 billion. A stronger trade balance could indicate an improved export performance, positively influencing the overall economic outlook.
Simultaneously, the U.S. dollar index (DXY) maintains a sideways trajectory post a rally, despite the softening of U.S. Treasury yields on Tuesday. However, risk sentiment, triggered by comments from Fed members speculating about a potential rate cut by the end of 2024, may act as a limiting factor for dollar profits.
Traders are eagerly anticipating the release of U.S. consumer price index (CPI) data for December on Thursday, recognizing its critical role in measuring inflationary pressures. The outcome of this economic indicator has the potential to significantly shape market expectations regarding the Federal Reserve’s monetary policy stance.
