Back to pre-CPI levels
AUD/USD jumped in a broad USD-selloff following US inflation data yesterday but today’s higher PPI print was enough to close what was left of the gap.
Commodity prices are generally lower today but sentiment overall is decent. European equities are up solidly on the day.
That’s not helping AUD/USD though and it’s down 30 pips to 0.7343.
Part of the drag is the ongoing cases and lockdown situation, particularly in NSW. However NZD/USD is also back to pre-CPI levels so it’s tough to solely point the figure at that.
My problem with Australia, New Zealand and China right now is that the strategy of total covid suppression isn’t going to work. The whole world is moving towards a strategy of living with covid and mitigating bad outcomes via vaccination. There’s a chance for them to switch it up as vaccines roll out but there might be a painful timing mismatch through year end.
As for AUD/USD, yesterday’s low of 0.7323 should contain any selling.