AUD/USD holds above the 0.6600 mark ahead of the Australian Retail Sales data

• AUD/USD surges to 0.6605 on the weaker USD in early Monday trading.
• US New Home Sales fell more than expected in October.
• An additional one to two rate hikes from the Reserve Bank of Australia (RBA) over the coming quarters cannot be ruled out.
• Market players will monitor the Australian Retail Sales for October and RBA Governor Bullock's speech on Tuesday.

The AUD/USD pair extends the rally above the 0.6600 psychological level during the early Asian session on Tuesday. The pair has reached its highest level since early August amid the US Dollar (USD) weakness. At press time, AUD/USD is trading around 0.6605, down 0.02% on the day.

On Monday, the US New Home Sales fell more than expected in October, dropping by 5.6% MoM to 679K, worse than the market expectation of 725K. Meanwhile, the November Dallas Fed Manufacturing Index dropped to -19.9 versus 19.2 prior. The US Dollar (USD) remains under pressure by declining to 103.20 as markets have moved to price-in a peak in the Federal Reserve's (Fed) tightening.

On the other hand, the risk-on mood, news of the Chinese stimulus plan, and the hawkish stance from the Reserve Bank of Australia (RBA) boost the Australian Dollar (AUD). The RBA Minutes last week suggested that an additional one to two rate hikes over coming quarters cannot be ruled out.

Market players await the Australian Retail Sales for October, due later on Tuesday. The figure is expected to drop from 0.9% to 0.1% MoM. Also, RBA Governor Bullock is set to speak at an event. On Wednesday, traders will take more cues from the Consumer Price Index (CPI). If the report does not surprise to the upside, the RBA will most likely hold the rate at its December meeting.

On the US docket, the US Housing Price Index, the S&P/Case-Shiller Home Price Indices, CB Consumer Confidence, and the Richmond Fed Manufacturing Index will be released on Tuesday. These events could give clear direction to the AUD/USD pair.