- AUD/USD posted weekly gains for fourth straight time last week.
- Greenback struggles to find demand as investors adjust positions into year-end.
- Coming up: Pending Home Sales, Wholesale Inventories and Goods Trade Balance data from US.
The AUD/USD pair extended its rally that started earlier in December and gained 80 pips last week to register weekly gains for the fourth straight time. Although the pair stretched higher during the Asian trading hours and touched its best level in more than five months at 0.6999, it lost its bullish momentum and was last seen moving sideways near 0.6990, adding 0.2% on a daily basis.
USD struggles to shake off selling pressure ahead of data
The broad-based USD weakness seems to have fueled the pair's latest run-up. The US Dollar Index, which climbed above 97.80 ahead of the Christmas break, fell sharply in the second half of the previous week and continued to edge lower on Monday. The lack of fundamental drivers behind the USD selloff suggests that the bearish pressure is likely caused by thin liquidity conditions and year-end flows. As of writing, the index was down 0.18% on the day at 96.84.
Meanwhile, upbeat macroeconomic data releases from China, namely Industrial Profits and Industrial Production, earlier in the month helped the AUD gather strength. On Monday, citing a commerce ministry official, Xinhua News Agency reported that retail sales in China were expected to expand by 8% in 2019 to 41.1 trillion yuan, or $5.88 trillion.
Later in the day, the US economic docket will feature Goods Trade Balance, Wholesale Inventories, Pending Home Sales and Dallas Fed Manufacturing Index data. In the early trading hours of the Asian session on Tuesday, investors will be keeping a close eye on Manufacturing and Non-Manufacturing PMI data from China as well.
Technical levels to watch for
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