AUD/USD grinds higher towards 0.7100 as softer China Caixin Services PMI probe bulls

• AUD/USD consolidates recent losses amid softer yields, mixed data from China, Australia.
• China Caixin Services PMI dropped below 52.9 forecast, 53.1 prior in January.
• Australia Q4 Retail Sales Output rallied by the record pace of 8.2%.
• Market sentiment dwindles amid Russia-linked fears, hawkish Fed concerns and wait for China’s reaction to recent market plays.

AUD/USD pauses the corrective pullback around intraday high near 0.7080 after China flashed downbeat data on their return during Monday’s Asian session. Also challenging the AUD/USD prices are geopolitical tension surrounding Russia and the market’s indecision over the next moves of the US Federal Reserve (Fed) and the Reserve Bank of Australia (RBA).

China Caixin Services PMI dropped to 51.4 in January, versus 52.9 market consensus and 53.1 prior.

Earlier in the day, Australia’s Retail Sales output for Q4 impressed AUD/USD buyers as the figures rose to an all-time high. “Figures from the Australian Bureau of Statistics (ABS) on Monday showed retail sales rose 8.2% when adjusted for inflation in the quarter to A$93.2 billion ($65.90 billion). That was easily the largest increase on record and beat forecasts of 8.1%,” said Reuters.

It’s worth noting that the retreat in the US Treasury yields also helps AUD/USD traders to pare the recent losses after declining for the last two consecutive days. It’s worth noting that the surprisingly upbeat US jobs report for January triggered the US dollar’s rebound from a three-week low and cut the Aussie pair’s weekly gains almost by a half.

That said, the US 10-year Treasury yield currently retreats from a two-year high while the US stock futures and Asia-Pacific equities drift lower.

In addition to the data and Treasury yields, indecision over the Fed’s next move, coupled with the hawkish hopes from the Reserve Bank of Australia (RBA) despite the latest cautious communication add to the AUD/USD pair’s recent sideways performance.

Moving on, a light calendar may offer a slow start to the week but China’s return from one-week-long holidays may entertain AUD/USD traders.

Technical analysis

Last week’s U-turn from the 50-DMA, around 0.7165 by the press time, directs AUD/USD sellers towards 2021 bottom surrounding 0.6995 before highlighting January’s low of 0.6966.