AUD/USD holds ground below 0.6450, focus on US data, Australia CPI
- AUD/USD trades higher ahead of the releases of US macroeconomic data.
- Investors seek fresh impetus on the economic outlook of both countries.
- Australia's CPI is due to be released on Wednesday; market consensus shows a reduction.
AUD/USD trades higher around 0.6440, extending gains for the second consecutive day during the European session on Tuesday. The pair strengthened due to the pullback in the US Dollar (USD) as investors seem to take a cautious stand, seeking further cues on monetary policy tightening by the United States (US) Federal Reserve (Fed) in the September meeting.
Market participants seek fresh impetus on the inflation outlook and economic conditions, awaiting data releases from the US, including Jolts Job Openings, Housing Price Index and Consumer Confidence are due to be released later in the North American session. Likewise, Australia's Consumer Price Index (CPI) will be eyed on Wednesday. The key indicator to measure inflation is expected to show a reduction in July.
The US Dollar Index (DXY) hovers around 104.00 at the time of writing, struggling to hold ground above that level. The downbeat US Treasury yields are contributing to the erosion of the US Dollar’s (USD) strength, which measures the performance of the Greenback against the six other major currencies.
Moreover, the upbeat Australia’s Retail Sales s.a. released on Monday contributed support to the strengthening of the AUD/USD pair. As said, the data showed a month-on-month growth of 0.5% in July, higher than the market consensus of 0.3%, swinging from the previous decline of 0.8%. Moreover, China’s fiscal stimulus also provided support to the Aussie pair as Canada is a close trading partner of China.
Furthermore, investors are also closely monitoring the visit of US Commerce Secretary Gina Raimondo to China, which is intended to strengthen trade relations between the United States and China. Positive sentiments regarding the Chinese economy hold the potential to instill confidence among AUD/USD buyers.