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Talking Points: Australian Dollar, AUD/USD, Delta Variant, Treasury Yields, Chinese CPI Markets in Asia-Pacific are expected to close the week on a negative note. The PBOC’s policy outlook will be illuminated by Chinese inflation data. The AUD/USD exchange rate is approaching crucial levels. Swing high level in September The Asia-Pacific Outlook for Friday After broad losses across Wall Street’s major equity indexes, the Asia-Pacific session got off to a cautious start on Friday. In comparison to the safe-haven US Dollar, the risk-sensitive Australian Dollar plummeted nearly a full percentage point. Despite this, the broad-based US Dollar DXY index fell, owing to some Euro strength. Short-term maturity yields surpassed longer-term yields, causing the Treasury curve to steepen. At the New York closing bell, the 5-year and 30-year yields fell 4.50 percent and 0.24 percent, respectively. As the perceived impediments to ongoing economic expansion grow, bond traders are gobbling up government debt. The rapidly expanding Delta Covid variant is currently a top priority for national policymakers. While the Delta variety has spread swiftly in recent weeks, becoming the dominant US strain earlier this week, international leaders have not implemented widespread lockdowns like those witnessed in 2020. Nonetheless, the mounting threat is clouding the economic recovery picture, leading to some softening in hawkish wagers by major central banks. In fact, Governor Philip Lowe of the Reserve Bank of Australia restated the perspective expressed in the most recent monetary policy statement in a speech on Thursday. In other words, the RBA does not expect rates to rise until 2024. Inflation increasing to the target range of 2 to 3 percent within the same time period is likewise unlikely. Offshore hiring has also hurt wage gains, according to the RBA Chief. China will release its June inflation numbers during Friday’s session. The year-over-year data is predicted to cross the wires at 1.3 percent, mirroring the previous month’s growth, according to the DailyFX Economic Calendar. The economic superpower will also release producer prices, with economists predicting an increase of 8.8% in June, down from 9% in May. The steep rise in commodity prices has aided in driving up the expenses that businesses spend to make goods, albeit most of these costs have yet to be passed on to consumers. Following the currency pair’s multi-year low in May, the Yuan has depreciated versus the greenback in subsequent months. Today’s CPI and PPI numbers will most likely provide insight on the PBOC’s monetary policy stance. AUD/USD Technical Predictions: Overnight, the Australian Dollar fell 0.74 percent versus the US Dollar, extending the AUD/losing USD’s streak to a fourth session. The September swing high appears to be underpinning an intraday decline, but if weakness persists, price will shortly test that level again. The MACD oscillator is still pointing lower, indicating that the market is still bearish. TradingView was used to construct this AUD/USD daily chart. TRADING RESOURCES FOR THE AUSTRALIAN DOLLAR —- Thomas Westwater, a DailyFX.com analyst, wrote this article. Use the comments area below to reach Thomas, or follow him on Twitter at @FxWestwateron./nRead More

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