AUD/USD LOOKS TO RECLAIM DAY’S HIGH AT 0.7140, US CORE PCE EYED

• AUD/USD is marching higher to recapture day’s high, focusing on US Core PCE for further guidance.
• The Fed is all set to push rates higher by 50 bps next week.
• A hawkish tone can be dictated by the RBA next week amid a higher inflation print.

The AUD/USD pair moved higher at day’s open to 0.7138 but faced barricades and surrendered most of its initial gains. Now, the aussie bulls are regaining control and are driving the major higher. The asset is likely to remain uncertain ahead of the monetary policy announcement by the Federal Reserve (Fed) next week.

Next week, Fed is all set to upthrust the interest rates by 50 basis points (bps). The aggressive hawkish move by the Fed would quicken the shift into an era of tight monetary policy and liquidity contraction from helicopter money and grounded policy rates. No doubt, the cautious move from the Fed is highly required to leash the roaring inflation.

Meanwhile, the US dollar front (DXY) has displayed some signs of exhaustion after printing a fresh 19-year high at 103.93 on Thursday. The market participants are focusing on Core Personal Consumption Expenditure (PCE) which is due in the New York session. The monthly Core PCE is seen at 0.3% against the prior print of 0.4% while the annual figure is expected to release at 5.3%, lower than the previous figure of 5.4%.

On aussie front, a higher Consumer Price Index (CPI) figure at 5.1% has triggered the data-dependent approach of the Reserve Bank of Australia (RBA) for an interest rate hike. In its last meet, the RBA dictated that the central bank doesn’t see any price pressure that could weigh rate teasing. Now, a much higher inflation figure could compel the RBA to a slightly hawkish tone.