AUD/USD faces barricades around 0.6750 ahead of Australian GDP and US PMI data

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• AUD/USD has sensed heat in stretching its recovery above 0.6750 as the risk appetite theme has not strengthened enough.
• A decline in the monthly inflationary pressures will provide relief to the RBA.
• The contraction in the US Manufacturing PMI is likely to trim ahead amid a recovery in the overall demand.

The AUD/USD pair has sensed pressure in stretching its recovery above the immediate resistance of 0.6740 in the early Tokyo session. The risk appetite theme has witnessed a decent interest, however, it is not strong enough to fuel risk-sensitive assets for vertical moves. The Australian Dollar is subjected to display sheer volatility ahead as investors are awaiting the release of Australia’s Gross Domestic Product (GDP) data, which will release on Wednesday.

The street is anticipating a decent growth in the scale of economic activities by 0.7% in the fourth quarter of CY2022, higher than the 0.6% price in Q3. On an annualized basis, the Australian GDP is expected to display the growth of 2.7% vs. the former release of 5.9%. It seems that the restrictive monetary policy offered by the Reserve Bank of Australia (RBA) has barricaded firms from accelerating output.

Apart from the Australian GDP data, monthly Consumer Price Index (CPI) numbers will be keenly watched. The monthly CPI (Jan) is seen lower at 7.9% from the former release of 8.4%. A decline in the monthly inflationary pressures will provide relief to RBA Governor Philip Lowe and other policymakers, which are worried about Australia’s sticky inflation.

S&P500 showed a recovery move on Monday after a bearish week as investors shrugged off the consequences of higher rates by the Federal Reserve (Fed). The recession fears in the United States have eased dramatically amid robust consumer spending due to strong wage gains. The US Dollar Index (DXY) is likely to remain sideways as investors are shifting their focus toward the release of the United States ISM Manufacturing PMI (Feb) data, which is scheduled for Wednesday.

The economic data is expected to improve to 48.0 from the former release of 47.4. A figure below 50.0 is considered a contraction in activities. Therefore, it would be worth calling it a decline in contraction. The New Orders Index that conveys forward demand is expected to rebound to 43.7 from the prior figure of 42.5.

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• Source: https://www.fxstreet.com/news/aud-usd-faces-barricades-around-06750-ahead-of-australian-gdp-and-us-pmi-data-202302272230