AUD/USD oscillates below 0.6400 as investors await US Inflation

 By OXShare

The AUD/USD pair is trading in a limited range just below 0.6400, with investors eagerly anticipating the October inflation data from the United States. The Australian asset is uncertain about which direction to take, as the US inflation data will determine whether the Federal Reserve (Fed) will support increasing interest rates.

During the European session, there was a slight increase in the S&P500 futures, indicating that market participants were becoming more willing to take risks. The US Dollar Index (DXY) fell continuously for the third trading session in a row, reaching a level close to 105.50, likely due to concerns about upcoming inflation data.

Economists predict that monthly inflation increased by 0.1% despite a higher growth rate of 0.4%. The annual Consumer Price Index (CPI) decreased to 3.3% from September’s reading of 3.7%. Both monthly and annual core CPI grew steadily, with a monthly increase of 0.3% and an annual increase of 4.1%.

The publication of the US inflation data will give insights into the actions the Fed may take in relation to monetary policy. Recently, Jerome Powell, the Chair of the Fed, expressed uncertainty about whether the existing monetary policy is adequately controlling rising prices.

Investors are eagerly anticipating the release of the Q3 Wage Price Index for the Australian Dollar on Wednesday. It is expected that the labor cost index will show a stronger growth rate of 1.3%, compared to a gain of 0.8% in the previous quarter.

If the labor cost index experiences a significant increase, it will lead to the anticipation of an additional interest rate hike by the Reserve Bank of Australia (RBA). As predicted, the RBA raised interest rates by 25 basis points (bps) to 4.35% last week.