AUD/USD grinds higher past 0.7100 amid sluggish markets, light calendar

• AUD/USD consolidates Friday’s heavy losses at a slower pace as markets look for fresh clues.
• Upbeat Aussie data, border reopening news battle fresh US-China tussle on Phase 1 deal to test momentum traders.
• Lack of major data/events ahead of Thursday’s US CPI will keep risk catalysts on the driver’s seat.

AUD/USD prices seesaw around 0.7125-20 during early Tuesday morning in Asia, having reversed most of Friday’s losses the previous day.

The risk barometer cheered multiple upbeat catalysts from home to post notable gains at the week’s start. However, a light calendar and the market’s wait for the US Consumer Price Index (CPI) data on Thursday may test the momentum traders looking forward.

Recently, the US-Japan trade announcements to cut tariffs on Japanese steel and fight excess output battled the Sino-American tensions over the Phase 1 deal to confuse the risk barometer pair. Also challenging the AUD/USD traders are the mixed performance of equities and the US Treasury yields.

On Monday, Australia’s TD Securities Inflation rose past 0.2% to 0.4% in January while ANZ Job Advertisements improved to -0.3% versus the revised down prior figures of -5.8%. Further, the AiG Performance of Services Index also improved past 49.6 to 56.2 whereas Q4 Retail Sales output flashed record growth of 8.2% in Q4 2021 versus 8.1% prior. Hence, Aussie data offered a good start to the bulls.

Elsewhere, Australia Prime Minister Scott Morrison announced the full reopening of the international borders for fully vaxxed visa holders from February 21. Also contributed to the AUD/USD rebound were the recent positive comments from Russian President Vladimir Putin as he said, “Russia will do all it can to find middle grounds that suit everyone.”

Moving on, National Australia Bank’s (NAB) Business Conditions and Business Confidence for January will decorate the economic calendar ahead of the US Goods Trade Balance for December.

Given the absence of major data/events and mixed concerns in the market, mostly positive, not to forget the shift in attention from hawkish central bank story to trade, AUD/USD prices are likely to continue grinding higher.

Technical analysis

AUD/USD pair’s recovery moves from 0.7050-45 horizontal area needs validation from 50-DMA level surrounding 0.7165.