Australian Dollar softens to near 0.7150, US CPI inflation data looms

The Australian Dollar (AUD) slipped to approximately 0.7155 against the US Dollar (USD) during the early Asian trading session on Friday. This movement was driven by the anticipation of stronger inflation data from the United States (US), which could prompt the Federal Reserve (Fed) to raise interest rates. Earlier this week, the US Producer Price Index (PPI) came in above expectations, increasing by 5.4% year-over-year in August, indicating elevated pressure on wholesale prices.

Meanwhile, the Reserve Bank of Australia (RBA) has signaled potential rate hikes, with Assistant Governor Sarah Hunter and Deputy Governor Andrew Hauser both expressing readiness to act if inflation remains elevated. The RBA's policy stance has become more hawkish, aligning with the US Treasury's preference for a firmer stance beyond the housing sector.

Technical analysis indicates a bullish bias for AUD/USD, with the pair trading above its 100-day Simple Moving Average and hovering near resistance levels. Key drivers of the AUD include the Reserve Bank of Australia's interest rate decisions, China's economic performance, the price of Australia's major export, Iron Ore, and overall trade balance.