AUD rebounds as Fed Chair Powell worries about weakening U.S. job market

AUD/USD recovered its intraday losses in early European trading on Wednesday, returning to a sideways range below 0.6750. However, AUD/USD faces challenges after Federal Reserve (FED) Chairman Jerome Powell testified before the US Congress on Tuesday. Although the Fed acknowledged that inflation data had improved, it remained firmly cautious.

The Australian dollar may be in trouble as China’s consumer price index (CPI), a close trading partner of Australia, increased by 0.2% year-on-year in June, down from 0.3% in May and the market expected an increase of 0.4%. China’s CPI fell 0.2% month-on-month in June, down from a decline of 0.1% in the previous value, lower than the market’s expectation of a decline of 0.1%.

Traders expect Fed Chairman Jerome Powell to deliver his second semi-annual testimony, and the Fed’s Michelle Bowman and Austan Goolsbee will also speak. In addition, people will also focus on the US Consumer Price Index (CPI) data scheduled for release on Thursday.

The market generally predicts that the annual rate of core CPI in the United States will stabilize at 3.4% as of June, while the monthly rate of overall CPI is expected to rise to 0.1%, compared with the previous value of 0.0%.

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