Ella 
The AUD/USD pair attracted some sellers and fell to the 0.6400 area during the European morning session on Wednesday. The pair is currently trading around 0.6404, down 0.33% on the day. Markets turned cautious ahead of the release of high-profile U.S. inflation data.
Australia’s consumer confidence index fell into negative territory in August, limiting the Aussie dollar’s upside potential. Data released on Tuesday showed that Australia’s Westpac Consumer Confidence Index fell 1.5% to 79.7 in September, compared with a 0.4% drop in the previous value. The data heightened concerns about the impact of China’s economic slowdown.
In addition, the Chinese government’s delay in implementing additional stimulus measures has also heightened concerns. It is worth noting that China is Australia’s largest trading partner, and the decline in China’s economy may put some selling pressure on the Australian dollar.
On the other hand, the U.S. dollar (USD) may benefit from the U.S.’s “higher and longer” interest rate narrative. The U.S. Consumer Price Index (CPI) for August may provide hints on further monetary policy from the Federal Reserve (Fed) in the second half of this year. The full-year CPI number is expected to rise to 3.6% from 3.2%, while the core number is expected to fall to 4.3% from 4.7%.
Market participants were awaiting U.S. consumer price index data for August due later in the day. Stronger-than-expected data could convince the Fed to raise interest rates again. On Thursday, attention will shift to Australian employment data and the US Producer Price Index (PPI) for August. These data may provide direction for the AUD/USD pair.
