AUD/USD registers mild gains after China’s upbeat inflation data

• AUD/USD refrains from welcoming the upbeat China data with a smile.
• Recently released Aussie data have been upbeat.
• Trade sentiment lingers amid mixed signals from the diplomats, headlines from China.

AUD/USD rises mildly to near 0.6530 after China released November month inflation data. The pair has been showing a lack response to the recent data.

China’s November month Consumer Price Index (CPI) bear 4.2% YoY forecast to 4.5% while monthly data also crossed 0.1% market consensus to 0.4%. Further Producer Price Index (PPI) recovered more than -1.5% expected to -1.4%.

Be it the quarterly Housing Price Index or monthly business data from National Australia Bank (NAB), not to forget the weekly consumer sentiment, Australian economics have been better since the day’s start. Also, the Reserve Bank of Australia (RBA) Governor Philip Lowe showed confidence in the bank’s forecast and anticipate a recovery in customer spending while speaking at a summit in Sydney during the early Asian hours.

Read: Australia data dump: Aussie holds steady despite positive data

Even so, the Aussie pair registers the second-day of declines as trade sentiment dwindles ahead of the key events up for taking place during the week. The list includes monetary policy meetings from the US Federal Reserve (Fed) and the European Central Bank (ECB), general election in the United Kingdom (UK) and the US tariff deadline for China.

Market’s risk tone has been sluggish off-late, amid trade uncertainty, which in turn fails to provide any direction to the US treasury yields and S&P 500 Futures after the previous day’s declines.

The United States (US) diplomats have been struggling to seal the best deal with Mexico and Canada but there has been no major success by now. A team led by the US Trade Representative Robert Lighthizer and President Donald Trump’s adviser Jared Kushner will fly to Mexico today for final talks.

Elsewhere, the US-China trade stalemate continues even after Beijing re-entered the US Soy markets after months of absence. However, comments from the US Agriculture Secretary Sonny Perdue keep buyers hopeful that the US will avoid additional Chinese tariffs on December 15.

While comments from RBA’s Assistant Governor Michele Bullock and trade headlines will be the key to watch, the US Nonfarm Productivity and Unit Labour Cost for the third quarter (Q3) will gain the spotlight afterward.

Technical Analysis

Only if the prices close below 100-day Simple Moving Average (SMA), around 0.6810 now, on a daily closing basis, sellers can aim for November month lows near 0.6755. Otherwise, the monthly top surrounding 0.6865 can be challenged again.