AUD/USD hardly moves as China inflation data offer no surprises

AUD/USD pays no heed to the China inflation data and continues to trade just above 0.76 handle after China inflation data printed pretty much in line with the estimates. 

China June y/y CPI came in at 1.5% vs. forecast of 1.5%. The month-on-month CPI fell 0.2%, compared to the estimate of a 0.1 % drop. Meanwhile, the June PPI printed as expected at 5.5% y/y. The data offered little positive/negative surprises and thus is unlikely to have any impact on the monetary policy. 

Thus, we are seeing no reaction from the AUD/USD pair and the 10-year Aussie bond yield, which trades around 2.79%. 

The spot continues to trade largely unchanged around 0.7603 levels. Ahead in the day, the spot would take cues from the US 10-year treasury yield, which currently trades around 2.39%.

riday’s jobs report not only boosted Dec rate hike bets, but also meant the Fed would soon announce that it is prepared to reduce its balance sheet size. Thus, yield spread may continue to favor the US dollar. 

AUD/USD Technical Levels

A break above 0.7624 (10-DMA) would open up upside towards 0.7679 (Mar 30 high) and 0.77 handle. On the downside, breach of support at 0.7593 (1-hour 50-MA) could yield a sell-off to 0.7571 (July 5 low) and 0.7550 (100-DMA).