AUD/USD wobbles above 0.6500 ahead of US inflation data

AUD/USD hovers slightly above 0.6500 ahead of the US inflation data for October.

Investors expect that Trump’s policies will be inflationary for the US economy.

The Australian Dollar will be guided by the labor market data for October.

The AUD/USD pair trades in a tight range near three month-low slightly above 0.6500 in the European trading session on Wednesday. The Aussie pair turns sideways as investors await the United States (US) Consumer Price Index (CPI) data for October, which will be published at 13:30 GMT.

According to the estimates, the headline inflation accelerated to 2.6% from 2.4% in September on year-on-year. In the same period, the core CPI – which strips off volatile food and energy prices – is estimated to have grown steadily by 3.3%. On month, headline and core inflation are expected to have risen at a steady pace of 0.2% and 0.3%, respectively. Investors will pay close attention to the inflation to get about cues the Federal Reserve’s (Fed) likely interest rate action in the December meeting.

The inflation data has regained its mojo lately as investors worry that the United States (US) inflation could rebound again, with high probability that President-elected Donald Trump could raise import tariffs by 10% and lower corporate taxes in this administration.

On Tuesday, the comments from former Fed official Loretta Mester in the UBS European Conference in London indicated that she is agreed with market expectations of fewer rate cuts in 2025 due to potential tariff hike by Donald Trump. "The market is right," she remarked, "they're probably not going to have as many cuts next year as was assumed or expected in September," CNBC said, Reuters reported.