- Business Confidence in Australia improves slightly in July.
- US Dollar Index struggles to hold above 97.50.
- Attention shifts to Wednesday's key data releases from China.
The AUD/USD pair gained traction during the Asian session on the back of upbeat data from Australia and stretched higher in the last couple of hours as the USD seems to be having a difficult time finding demand ahead of the inflation data. As of writing, the pair was up 0.25% on the day at 0.6770.
The National Australia Bank's (NAB) Business Confidence Index in July improved to 4 from 2 in June and surpassed analysts' estimate of 3. Although the NAB's Business Conditions Index edged lower to 2 in the same period, it still came in better than the market expectation of 1 to help the AUD gather strength.
Key US and China data to drive AUD/USD in near-term
On Wednesday, the Westpac Consumer Confidence Index and the Wage Price Index data from Australia will be looked upon for fresh impetus. More importantly, markets will be paying close attention to Retail Sales and Industrial Production data from China to see if the trade dispute with the US is having a negative impact on the world's second-largest economy.
On the other hand, after snapping its three-week winning streak last week, the US Dollar Index (DXY), which tracks the dollar's value against a basket of six major currencies, is staying in a consolidation phase as the poor performance of the US Treasury bond yields is not allowing the currency to stage a decisive recovery. Later in the day, the US Bureau of Labor Statistics' inflation report could trigger a sharp reaction in the DXY. Experts see the core Consumer Price Index (CPI) staying unchanged at 2.1% on a yearly basis.
Technical levels to watch for
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