AUD/USD sticks to modest daily gains above 0.6860 ahead of CPI data
- Annual CPI in Australia is expected to pick up to 1.7% in Q3.
- Disappointing consumer sentiment data weighs on the Greenback.
- US Dollar Index posts modest losses ahead of FOMC's policy announcements.
The AUD/USD pair fell to 0.6840 area during the European trading hours but gained bullish momentum in the second half of the day supported by the broad-based USD weakness. Ahead of the inflation data from Australia, the pair is trading at 0.6862, adding 0.25% on a daily basis.
USD weakens on dismal confidence data
The Conference Board on Tuesday reported that consumer confidence deteriorated in the United States in October with the Consumer Confidence Index dropping to 125.9 and missing analysts' estimate of 128. The US Dollar Index, which climbed higher toward the 98 handle earlier in the day, lost its traction on the disappointing data and now looks to close the day with small losses near 97.70.
The Australian Bureau of Statistics is expected to announce that the annual Consumer Price Index (CPI) in the third quarter rose to 1.7% from 1.6%. A softer-than-expected reading could weigh on the AUD as it would allow the Reserve Bank of Australia to remain dovish with regards to its policy outlook.
Earlier on Tuesday, Reserve Bank of Australia (RBA) Governor, Philip Lowe, said that the RBA's governing board was prepared to ease the monetary policy further if needed.
On Wednesday, the Federal Reserve will be announcing its interest rate decision following the US Bureau of Economic Analysis' third-quarter Gross Domestic Product (GDP) report. Previewing the Federal Open Market Committee's (FOMC) policy statement, "The FOMC should communicate patience in deciding future policy moves as they assess the impact of the three cuts they have already delivered," said TD Securities analysts. "We look for the Fed to temporarily pause before resuming rate cuts in Q1 2020."
Technical levels to watch for