Forex - AUD/USD lower after Australian PPI

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Investing.com - The U.S. dollar weakened against its Australian counterpart during Friday's Asian trading session after data out of Australia indicated that inflation might be weaker than expected.

The AUD/USD shed 0.18% to trade at 1.0408, down from a session high of 1.0446, and up from a session low of 1.0396. Support was likely to be found at 1.0391, the low from Thursday, while resistance could be found at 1.0476, Tuesday's high.

Australia's producer price index came in on Friday at 0.2% -- economists had forecast a gain of 0.4%. The PPI is known as a sign of future inflation, as it signals the price changes businesses are paying for manufactured goods. Over time, businesses should pass these price hikes onto consumers, raising the consumer price index -- the general sign of inflation.

Also on Friday, China's official manufacturing PMI printed below expectations at 50.40; the consensus estimate was for 50.90. Australia's economy remains heavily dependent on its mineral exports, many of which are shipped to China.

With inflation likely to be subdued, and China's economic recovery limited, the Australian dollar was free to rally, especially against the greenback, which was broadly weaker. The U.S. dollar index shed 0.09% to trade at 79.17 Friday.

Earlier on Thursday, economic data released in the U.S. was mixed. The Chicago PMI came in better than expected at 55.6 (economists had forecast 50.5), signalling economic expansion in the Midwestern region of the U.S., but jobless claims came in worse than expected. Initial jobless claims printed at 368,000, more than the 350,000 consensus estimate.

With the job market in the U.S. continuing to be sluggish, it seems likely that the Federal Reserve will have to keep up its expansionary monetary policy for some time. The Federal Reserve has promised to keep interest rates near 0 until the unemployment rate in the U.S. drops to 6.5%.

Looking ahead, the U.S. nonfarm payroll report will released early Friday. That will paint a more clear picture of the jobs market. &nb Investing.com
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