AUD/USD consolidates its gains near 0.6430 ahead of Australian Confidence survey

• AUD/USD takes a breather after surging from 0.6370 to 0.6430 amid the improvement in risk sentiment. 
• The Australian Dollar benefited from the upbeat China's inflation data. 
• Traders will monitor the Australian Confidence survey, US Consumer Price Index (CPI) data. 

The AUD/USD pair edges higher and consolidates its recent gains around 0.6430 during the early Asian session on Tuesday. The rebound of the pair is bolstered by the weaker US Dollar (USD) and improvement in risk sentiment. Meanwhile, the US Dollar Index (DXY) hovers around 104.50 after retracing from the 105.00 area. 

The China-proxy Australian dollar (AUD) benefited from China's inflation data. The Chinese Consumer Price Index (CPI) rose 0.1% YoY, from a 0.3% drop in the previous month, compared to the 0.2% rise anticipated. The monthly figure was 0.3% as expected. The improvement in Chinese inflation figures boosted the risk-on mood and dragged the safe-haven US Dollar lower.

On the US Dollar front, investors await the highly-anticipated US Consumer Price Index (CPI) data which might convince the Federal Reserve (Fed) interest rate expectation. The upbeat data would suggest the Federal Reserve needs to tighten monetary policy. This, in turn, might lift the Greenback against its rivals. 

After the G20 Summit, US Treasury Secretary Janet Yellen conveyed more optimism that the US could control inflation without damaging the employment market. Yellen also said on Sunday that every gauge of inflation is declining and there were no massive wave of layoffs. Chicago Fed President Austan Goolsbee outlined the central bank's goal of leading the economy into a "golden path." This route represents a scenario in which inflation falls without causing a recession. Furthermore, Fed New York President John Williams said last week that highlighted the decline in inflation and an improving economic balance.

Looking ahead, market participants await the Australian Confidence surveys due later on Tuesday. The Westpac Consumer Confidence is expected at 0.6%. The NAB Business Confidence Index is expected to drop to 1 in August, up from -2 in July. Later this week, the US Consumer Price Index (CPI) on Wednesday and the Producer Price Index (PPI) on Thursday will be released. Traders will take cues from these figures and find the trading opportunity around the AUD/USD pair.