• AUD/USD stays on the back foot, consolidating weekly gains even after strong data release.
• Australia Retail Sales jumped 1.3% in September, PPI grew 1.1% in Q3.
• Sour sentiment exerts additional downside pressure, absence of US stimulus can be linked to the mood.
• US Core PCE Price Index data will be the key to watch for fresh impulse.

AUD/USD struggles to justify the strong Aussie Retail Sales, as well as mixed PPI data, taking rounds to 0.7530 support, down 0.15% intraday during early Friday. The reason could be the market’s risk-off mood and a lack of major data/events elsewhere.

Australia Retail Sales not only snapped a three-month downtrend but rose past +0.2% forecast to +1.3%, versus -1.7% prior, during September. Additionally, the Producer Price Index (PPI) data for the third quarter (Q3) also jumps above +0.3% market consensus and +0.7% prior readings to +1.1%. Further, the YoY figures rose to 2.9% versus 3.2% expected and 2.2% previous readouts.

Before the Aussie data releases, the downbeat mood in the market weighed on the AUD/USD prices due to its risk barometer status. The sour sentiment could take clues from an absence of a deal on US President Joe Biden’s $1.75 trillion stimulus package. Recently, US House Speaker Nancy Pelosi conveyed her optimism towards the passage of both infrastructure and social spending, climate bills during the phone call to postpone the vote on the infrastructure bill.

To portray the mood, S&P 500 Futures print mild losses while the US 10-year Treasury yields struggle for clear direction around 1.568%.

Given the lack of major data/events and sluggish sentiment ahead of the Federal Reserve’s (Fed) preferred inflation gauge, the AUD/USD prices may remain lackluster until getting any strong risk catalysts, which is less likely. Though, increased hopes of the RBA rate hike keep the pair buyers hopeful.

Read: RBA will wait until the Q2 2023 before raising interest rates – Reuters poll

Market forecasts suggest that the Core Personal Consumption Expenditures (PCE) – Price Index for September is likely to ease to 0.2% from 0.3% prior on the MoM basis. The same should add to hopes of a bit slower dial-back of easy money by the Fed, which in turn may extend the latest US dollar weakness and help AUD/USD bulls.

Read: Personal Consumption Expenditure Price Index September Preview: Transitory inflation becomes permanent

Technical analysis

AUD/USD bulls need to conquer the 200-DMA level surrounding 0.7560 to reject odds of dropping back below the monthly support line, around 0.7530 by the press time. That being said, bullish MACD and firmer RSI line, not overbought, favors the pair buyers.