AUD/USD is sliding on COVID-19 wave fears in early Asia ahead of CPI

• AUD/USD is wilting in early Asia on COVID-19 woes and ahead of key data. 
• There are downside risks to the AUD should US election polls narrow from here.

AUD/USD is currently trading at 0.7117, under some pressure in early Asia ahead of key data for the day ahead. 

A slightly risk-on tone in other asset classes has soured into the close on Wall Street and early Asia following the confirmation of speculation that part of Europe's economic activity is about to be locked down due to the rapid spread of the second wave of COVID-19.

In recent trade, the news that the French President Emmanuel Macron is expected to announce a nationwide (degree uncertain) lockdown on Wednesday during a televised address to the nation at 8 pm that will start on Thursday night has pressured risk asset classes.

Risk-off tones will likely be felt in the commodity sector for which AUD trades as a proxy to.

Both copper and oil are down today already and the CRB index is weaker, capped by the risk-off flow.

Meanwhile, overnight, AUD/USD chopped a little higher, to 0.7135, in relatively subdued trade and regional equities were mostly well contained. 

The mood on Wall Street was more positive which could underpin Aussie stocks and potentially buoy the currency considering how well the spread of the coronavirus has been contained in Australia in comparison to the US and Europe. 

The US polls a major focus

Meanwhile, US polls continue to favour a sweeping Biden victory in the US elections which is supportive of risk appetite and weighs on the greenback.

However, if the polls tighten between now and the election day, November 3rd, then the Aussie could come under some pressure given that the US dollar could start to rise. 

In fact, Donald Trump has narrowed Joe Biden's lead in the crucial battleground state of Pennsylvania, increasing from 44.7 points on 25 October to 45.1 points the next day, as the Democratic contender slipped 0.1 points over the same period. 

Biden, meanwhile, currently holds an advantage that is four times larger than Hillary Clinton's was at this stage in 2016.

Aussie CPI ahead

For the day ahead, Australia’s third-quarter consumer price index report is due at 11:30 am Syd/8:30am Sing. 

''A 1,400% rise in childcare prices and a lift in fuel prices will drive a bounce in headline inflation in Q3,'' analysts at Westpac explained. 

''The market and Westpac expect a 1.5% for the quarter and 1.1% jump respectively (prior: -1.9%). 
The trimmed mean should see a flat result, however, with rents and the HomeBuilder grant weighing, and inflation elsewhere restricted by narrowly-focused consumption (prior: -0.1% market f/c: 0.3%, Westpac: 0.0%).''

AUD/USD levels