AUD/USD oscillates above 0.6730, downside looks likely below 0.6700 ahead of US Inflation

• AUD/USD is hovering around monthly lows at 0.6715, downside remains warranted on risk-off impulse.
• Volatile energy and food products are still guiding the US CPI higher despite policy tightening measures.
• Aussie’s jobless rate may decline to 3.8% vs. 3.9% reported prior.

The AUD/USD pair has turned sideways after a sheer downside move to Monday’s low at 0.6715 on a risk-off impulse on the market. The asset is hovering around its fresh monthly low as the US dollar index (DXY) has printed a fresh 19-year high at 108.27.

The DXY extended its gains beyond the prior high of 107.79 on a higher consensus for US Inflation. A preliminary estimate for the plain-vanilla Consumer Price Index (CPI) is 8.7%, higher than the print of 8.6%. While the core CPI may settle lower to 5.7%.

The core CPI doesn’t include fossil fuels and food products and is seen lower, however, the annual CPI that includes the duo is seen higher. This indicates that the volatile energy bills and food items are still guiding the inflation rate significantly despite the deployment of policy restrictive measures by the Federal Reserve (Fed).

Apart from the US CPI, investors will also focus on the US Retail Sales this week. The economic data is seen meaningfully higher at 0.8% than the prior print of -0.3%.

On the aussie front, investors are keeping an eye on the employment data, which is due on Thursday. The Employment Change is expected to land at 25k, less-than-half than the prior release of 60.6K. However, the Unemployment Rate will slip to 3.8% vs. 3.9% reported previously.