AUD/USD retreats to levels near 0.6400 ahead with US inflation in the spotlight

• The Aussie Dollar gives awa¡y gains with investors growing cautious ahead of US PCE inflation data
• The Dollar lost ground on Thursday as the US Court of Appeals paused the ban on tariffs.
• Weak Australian consumption and construction data have added pressure on the Aussie.

The Aussie Dollar is retracing Thursday's gains on Friday, with investors wary of holding large US Dollar shorts ahead of the release of US PCE inflation data. The pair, however, remains trapped within the 0.6400 to 0.6450 range for the third consecutive day.

The US lost ground on Thursday, after the US Federal Court of Appeals paused a lower court's sentence to block most of the trade levies introduced on April 2, giving a fresh twist to the global trade saga.

The ruling reactivated fears about global trade uncertainty, amid the lack of progress on the trade negotiations with partners. This decision, coupled with the growing concerns about the US fiscal stability, has led to a steady sell-off of all US assets during the last few weeks.

Investors are trimming Dollar shorts ahead of the US PCE Prices Index release

The Greenback, however, is going through some short covering during Friday's European session, with investors closing some Dollar short positions ahead of the US PCE Prices Index release.

PCE inflation is expected to have ticked up in April, yet with the yearly rate cooling further. Headline inflation is seen slowing down to 2.2% from 2.3%, and the Core PCE Prices Index easing to 2.5% in April, after March's 2.6% reading.

In Australia, recent data have not been particularly supportive. Retail Sales and Building permits dropped against expectations in April, but the strong CPI data seen earlier this week casts doubt about a July cut, and is keeping the Aussie from falling further.