Ella 
The AUD/USD was still on the defensive in early Asian trading on Monday. Risk sentiment dominated AUD/USD ahead of Tuesday’s release of US Retail Sales and Reserve Bank of Australia (RBA) meeting minutes. AUD/USD is currently trading around the 0.6305 level, up 0.15% on the day.
Last Friday, China’s National Bureau of Statistics announced that China’s CPI was at an annual rate of 0% in September, compared to the previous reading of 0.1% and lower than the expected reading of 0.2%. The producer price index registered -2.5%, compared with the previous reading of -3% and lower than the expected reading of -2.4%. The Chinese data shows that the country’s economy is still struggling despite the government’s latest stimulus plan to help the country’s economy achieve its 5% growth target.
In addition, escalating geopolitical tensions in the Middle East continue to weigh on risk currencies such as the Australian dollar and are negative for AUD/USD.
As for the Dollar, upbeat U.S. inflation data has increased market expectations that the Federal Reserve (Fed) may raise interest rates. The U.S. Consumer Price Index for September was 3.7% on an annual basis and 0.4% on a monthly basis. Both figures exceeded market expectations.
On Friday, the preliminary reading of the U.S. Michigan Consumer Confidence Index for October fell to 63.0 from the previous reading of 68.1, which was lower than the expected reading of 67.4. At the same time, the University of Michigan’s preliminary one-year inflation expectation for October rose to 3.8%, with the expected value rising to 3.2%, and the five-year inflation expectation jumped to 3% from 2.8%. Meanwhile, the US dollar (USD) continues to benefit from safe-haven inflows amid rising geopolitical tensions between Israel and Palestine.
Looking ahead, geopolitical tensions will remain at the center of AUD/USD volatility. On Tuesday, U.S. Retail Sales for September will be released and are expected to show an increase of 0.2%. In Australia, the minutes of the Rese
