AUD/USD drops to near 0.7430 as China’s CPI lands at 1.5%

• AUD/USD shrugs off opening gains after a higher China CPI print at 1.5%.
• The DXY is eyeing to recapture 100.00 backed by firmer responsive buying.
• China’s PPI has landed at 8.3%, higher than the estimate of 7.9% but lower than the prior figure of 8.8%.

The Australian dollar gained ground against the US dollar after China's National Bureau of Statistics revealed that the country's annual Consumer Price Index (CPI) rose by 1.5 percent. The annual CPI came in at 1.2 percent, which was higher than the previous print of 0.9 percent and the forecasts of the street, which were both 0.9 percent.

While the annual Producer Price Index (PPI) in China has come in at 8.3 percent, it has beaten expectations of 7.9 percent but has stayed lower than the prior reading of 8.8 percent.

That means the People's Bank of China (PBOC) will be limited in its ability to implement looser monetary policies in the future. It is worth mentioning that the People's Bank of China (PBOC) has maintained interest rates at 3.7 percent for the last two months.. In January, the People's Bank of China (PBOC) decreased its lending prime rate (LPR) by 10 basis points (bps). Australia, being a major supplier to China, has a proportionate connection with the policies of the Chinese government. Increased inflation data may lower expectations of loosening monetary policy, which will have an influence on the antipodean currency.

Earlier, the asset fell after reaching a new all-time high of 0.7662, as the Reserve Bank of Australia (RBA) maintained its policy stance on Wednesday. Market watchers were expecting the Reserve Bank of Australia to maintain its current monetary policy while taking a less-dovish attitude since inflation in the international economy is leaping higher but the growth rate is not progressing correspondingly.

Meanwhile, the US dollar index (DXY) is attempting to recapture 100.00 after entering the week with a negative gap on Monday. After a brief dip in early April, investors are banking on a higher-than-expected inflation print and, ultimately, a higher-than-expected interest rate decision by the Federal Reserve (Fed) later in the month of May.