AUD/USD sees more gains above 0.6960 as DXY weakens ahead of US economic data
|- AUD/USD is expected to extend the intraday rally after violating the hurdle of 0.6960.
- The DXY has tumbled below 104.00 on lower forecasts for the US Durable Goods Orders.
- Aussie bulls will dance to the tunes of the Retail Sales data this week.
The AUD/USD pair has witnessed a decent upside move in the early Tokyo session and is expected to extend its gains after overstepping the critical hurdle of 0.6960. The asset is performing better as the US dollar index (DXY) is declining sharply and has surrendered the crucial support of 104.00.
The DXY is underperforming as the last week’s downbeat performance from the US PMI figures is expected to be carry-forwarded by the Durable Goods Orders on Monday. Poor performance by the US economy on the Manufacturing and Services PMI front has already dented the sentiment of the market participants towards the DXY.
Investors believe that the price pressures and policy tightening have started affecting the overall demand structure. Last week, PMI figures remained vulnerable. This week, lower estimates from US Durable Goods Orders are expected to add fuel to the fire. A preliminary estimate for the economic data is 0.1% vs. 0.5% in the prior release. Investors should be aware of the fact that the weak performance of the US economy on the economic data front will make the Federal Reserve (Fed) more hesitant in featuring extreme policy tightening measures.
On the aussie front, investors are focusing on the release of the Retail Sales, which are due on Wednesday. Australian Bureau of Statistics is expected to report the monthly Retail Sales at 0.4%, lower than the prior print of 0.9%. This may weaken the aussie bulls against the greenback.
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