Bias: bullish-to-range-bound, as AUD/USD sits above its 90-day average and near the upper half of the last three months' range.
Key drivers:
• Rate gap: The RBA has signaled possible rate hikes in coming years, widening the policy gap versus the Fed and supporting the AUD when risk appetite holds and global growth remains stable.
• Risk/commodities: Softer Chinese inflation points to softer demand for Australian commodities, weighing on the AUD, though iron ore or energy rallies could limit losses.
• Macro: January AU CPI and Labour Force data loom large; inflation surprises or solid jobs data likely drive the pair, shaping near-term timing for bids and offers.
Range: the pair is likely to drift within the last 3 months' range, with a tilt toward the upper end as buyers test resistance amid cautious liquidity.
What could change it:
• Upside risk: hotter-than-expected Australian inflation or jobs data boosting rate-hike bets.
• Downside risk: stronger US data lifting the USD and reducing the rate gap.
