AUD/USD consolidates around the 0.6600 mark on the softer USD

• AUD/USD oscillates near 0.6600 amid the risk rally in the market.
• US University of Michigan consumer sentiment rose in January to its highest since July 2021.
• The Australian Unemployment Rate came in at 3.9% in December vs. 3.9% prior; Employment Change arrived at -65.1K vs. 17.6K expected.
• The US GDP growth numbers (Q4) and the Core PCE will be the highlights this week.

The AUD/USD pair consolidates around the 0.6600 mark during the early Asian session on Monday. The pair benefits from a risk rally in global markets. However, the escalating geopolitical tension in the Middle East might lift the safe-haven US Dollar (USD) and might cap the upside of the AUD/USD. The pair currently trades around 0.6595, losing 0.03% on the day.

The US Michigan Consumer Sentiment Index rose to 78.8, the highest level since July 2021. The assessment of current economic conditions grew to 83.3, and the expectations component climbed to 75.9. FOMC committee members enter the black-out period as they prepare for its January meeting. Investors await the December Core Personal Consumption Expenditures Price Index (Core PCE) for fresh impetus. The monthly and annual Core PCE are expected to show an increase of 0.2% MoM and 3% YoY, respectively.

The US has continued to launch attacks on Houthi targets in Yemen. Concerns over the escalation of the Middle East war intensified as Iran carried out missile attacks on an alleged Israeli spy site in northern Iraq, as well as a strike on Pakistan targeting another militant group. This, in turn, might boost a safe-haven asset like the Greenback and weigh on the AUD/USD pair.

On the Aussie front, the Australian Bureau of Statistics (ABS) revealed last week that the nation’s Unemployment Rate came in at 3.9% in December, compared with expectations of 3.9% and the previous figure of 3.9%. Meanwhile, the Employment Change arrived at -65.1K in December, compared with the market consensus of 17.6K and 61.5K jobs added in November.

In the absence of top-tier economic data from the Australian docket this week, risk sentiment will likely play a pivotal role and influence the pair. The preliminary US Gross Domestic Product Annualized (GDP) for the fourth quarter will be released on Thursday, and the Core PCE will be due on Friday. These figures could give a clear direction to the AUD/USD pair.