China's soft CPI and PPI data signals deflation risk, weighs on AUD.
Deflationary risks in China may limit fiscal measures to boost consumption.
USD recovery also contributed to the downturn.
The AUD/USD declined by 0.25% to 0.6655 on Monday, weighed down by recession fears and weak data from China. China's soft inflation figures data signaled deflation risks. The US dollar strengthened, which also weighted on the pair.
The Australian economy faces an uncertain future. The Reserve Bank of Australia's (RBA) aggressive stance against inflation suggests that any potential easing in monetary policy is unlikely in the near term. Market expectations have shifted, with only a slight reduction of interest rates by 0.25% being anticipated in 2024.
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