• AUD/USD rises around 0.24% on Monday, trading near 0.7040 at the time of writing.
• Stronger-than-expected Chinese inflation supports the Australian Dollar.
• The US Dollar remains underpinned by geopolitical tensions and rising Oil prices.

AUD/USD advances on Monday, trading around 0.7040 at the time of writing, up 0.24% on the day. The pair benefits from renewed demand for the Australian Dollar (AUD) as stronger-than-expected economic data from China provides support to currencies closely linked to Chinese growth.

China’s Consumer Price Index (CPI) rose by 1.3% YoY in February, sharply accelerating from 0.2% in January and marking the highest level in three years, according to data released by the National Bureau of Statistics of China. The figure came above market expectations and helped improve sentiment toward the Australian Dollar, often considered a proxy for Chinese economic momentum. Meanwhile, China’s Producer Price Index (PPI) declined by 0.9% YoY in February, compared with a 1.4% drop previously and better than the expected 1.1% fall, suggesting some stabilization in factory-gate prices.

Despite the recovery in the Aussie, the upside for AUD/USD remains somewhat limited by underlying support for the US Dollar (USD). A sharp intraday surge of more than 25% in Crude Oil prices has intensified global inflation concerns and reduced expectations of near-term interest rate cuts by the US Federal Reserve (Fed). This development, combined with persistent geopolitical tensions in the Middle East, continues to support safe-haven demand for the Greenback.

Geopolitical risks have also increased after Mojtaba Khamenei was announced as Iran’s new Supreme Leader. US President Donald Trump stated last week that the appointment would be “unacceptable”, raising fears of further escalation in the region and maintaining a cautious mood across financial markets.

Meanwhile, the US Dollar Index (DXY), which measures the value of the US Dollar against a basket of six major currencies, trades around 99.15, up 0.18% on the day. Looking ahead, investors are now focusing on the release of the US CPI data for February on Wednesday, which could provide fresh clues about the Federal Reserve’s policy outlook and influence the next direction for AUD/USD.