AUD/USD consolidates near 0.6750 as investors await US Inflation

• AUD/USD trades sideways with US Inflation in focus.
• Fed Powell cited concerns over easing US labor market strength.
• The RBA is expected to leave interest rates unchanged for the entire year.

The AUD/USD pair stays in a tight range near 0.6750 in Wednesday’s European session. The Aussie asset turns sideways as investors have sidelined with focus on the United States (US) Consumer Price Index (CPI) data for June, which will be published on Thursday.

The inflation data will provide cues about when the Federal Reserve (Fed) will start reducing interest rates. Meanwhile, market sentiment remains firm as investors see the Fed reducing interest rates in September meeting a done deal due to easing US labor market conditions. S&P 500 futures have posted some gains in European trading hours. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, hovers near 105.00.

On Tuesday, Fed Chair Jerome Powell said in the semi-annual Congressional testimony on Tuesday that escalated inflation has not remained the only risk to Fed’s dual mandate. Powell cautioned about easing US labor market strength as the US is no longer an overheated economy.

Latest US Nonfarm Payrolls data also showed a slowing trend in job demand, a rise in the Unemployment Rate to its highest in more than two years and expected slowdown in Average Hourly Earnings, a wage growth measure.

On the Aussie front, growing speculation that the Reserve Bank of Australia (RBA) will be the last to join the global rate-cutting cycle has kept the Australian Dollar (AUD) on the front foot. The RBA is expected to keep its Official Cash Rate (OCR) at its current levels for the entire year due to reversed disinflation process, prompted by strong consumer spendings.