Ella 
In early Asian trading on Monday, AUD/USD was trading above the psychological mark of 0.6600, with a mildly bearish trend. AUD/USD is lower as the U.S. dollar (USD) rebounds slightly to 102.75 after retracing to 102.40. Investors will be closely watching U.S. consumer price index (CPI) and retail sales data this week for new impetus. As of press time, AUD/USD was trading at 0.6620, unchanged throughout the day.
U.S. nonfarm payroll employment increased by 275,000 in February from 229,000 in January, better than expectations for a 200,000 increase. Meanwhile, average hourly earnings came in at an annual rate of 4.3%, below expectations and the previous reading of 4.4%. The unemployment rate climbed to 3.9% from 3.7% in January.
Federal Reserve Chairman Jerome Powell said in semi-annual testimony last week that the labor market is relatively tight, but supply and demand conditions continue to be balanced. Markets believe the Fed needs more data to be confident that labor supply is recovering. The CME FedWatch tool shows traders are almost fully pricing in a rate cut in June, with a rate cut of nearly 100 basis points by the end of the year.
On the other hand, China’s consumer price index (CPI) climbed for the first time in six months, boosted by consumption during the Lunar New Year. China’s annual inflation rate in February was 0.7%, higher than expected at 0.3%, the first monthly increase in inflation since August 2023. The producer price index came in at an annual rate of -2.7% in February, below expectations and January’s -2.5% rate. Chinese inflation data provided some positive signals for the world’s second-largest economy and boosted China’s proxy currency, the Australian dollar (AUD).
Looking ahead, market participants will be closely watching U.S. February inflation and retail sales data due on Tuesday and Thursday respectively. In the Australian dollar, the Westpac Consumer Confidence Index for March will be released on Tuesday. These events may clarify the AUD/USD currency direction.
