• China’s CPI has landed at 1.5%, against the expectation of 0.1% and previous readout of 0.9%.
• The Fed’s hawkish outlook and the dovish RBA has underpinned the bearish trend for AUD/USD.
• Ukraine woes weigh on the market sentiment.

The Australian dollar lost its ground against the American dollar during Monday trading session despite as China’s CPI lands at 1.5%.

China’s National Bureau of Statistics has reported the yearly Consumer Price Index (CPI) at 1.5% against the expectation of 0.1% and previous readout of 0.9%. The China’s monthly CPI was reported at 0.0% against the expectation of -0.1% but less than previous readout of 0.6%.

While Producer Price Index (PPI) was reported at 8.3% that has outperformed the expectation of 7.9% but has remained lower than the previous print of 8.8%.

The upbeat data has rose the expectation for aggressive policy easing by the People’s Bank of China (PBOC). This, in turn, acted as a headwind for the China-proxy Australian dollar amidst the US dollar strength.

Meanwhile, Reserve Bank of Australia (RBA) kept its policy unchanged on Tuesday. An unchanged monetary policy and a less-dovish stance by the RBA were highly expected by the market participants since the inflation in the world economy is surging higher while the growth rate is not advancing proportionally.

On the other hand, bullish sentiment is surrounding the US dollar. Rising inflation and a tight labor market in the US economy are aiming for a healthy interest rate hike by the Fed in May’s monetary policy. The US Unemployment Rate has fallen to 3.6% and is been printing below 4% consistently for the last three months, which indicates an achievement of full employment levels. Whereas the US Consumer Price Index (CPI) will be released on Tuesday. A preliminary estimate for the yearly US CPI at 8.3% against the previous figure of 7.9% will be an alarming situation for the market. This will elevate an interest rate hike by 50 basis points (bps).

Ukraine crisis also weigh on the market sentiment, Russian forces pounded targets in eastern Ukraine with missiles and artillery on Sunday, as Austria’s leader planned to meet with Russian President Vladimir Putin.

AUD/USD 4 Hour Chart:

Support: 0.7420 (S1), 0.7390 (S2), 0.7354 (S3).

Resistance: 0.7486 (R1), 0.7522 (R2), 0.7553 (R3).

Amidst all the catalysts weighing on the AUD, we expect a bearish trend for AUD/USD.