AUD/USD inches closer to 0.7200 as risk-on mood joins mixed Aussie data

• AUD/USD refreshes intraday top despite mixed Aussie data.
• Australia Retail Sales rallied 7.3%, Trade Balance eased to 9423M in November.
• Risk appetite improves amid softer yields, hopes of faster economic transition and Omicron news.
• Fed’s Powell pledges to stop inflation from getting entrenched while citing economic optimism.

AUD/USD renew the daily peak near 0.7185, up 0.13% intraday, as mixed data at home joins the market’s cautious optimism to challenge immediate moves during early Tuesday.

Australia’s Retail Sales rose past 3.9% forecasts and 4.9% prior to 7.3% MoM whereas the Trade Balance eased to 9423M versus 10600M expected and 11220M previous readouts, per the latest readings for December. Details suggest that the Exports and Imports both increased from -3.0% respective prior for each to 2.0% and 6.0% in that order.

Other than the data, the market’s cautious optimism could also be cited as an additional catalyst for the AUD/USD pair’s recent gains, considering the pair’s risk-barometer status.

The hawkish comments from Fed Chair Jerome Powell, per the prepared remarks for today’s Testimony, could be considered as a major favor to the risk-on mood. The Fed Boss said, “The economy is growing at its fastest rate in years, and the labor market is robust,” to back his pledge to stop higher inflation from getting entrenched.

Additionally, comments from Merck’s official saying, “Expect Molnupiravir mechanism to work against omicron, any covid variant,” could also be cited as positive for the risk appetite.

It’s worth noting that the steady US inflation expectations, as per 10-Year Breakeven Inflation Rate numbers from the Federal Reserve Bank of St. Louis (FRED), also challenge the bears ahead of the key US Consumer Price Index (CPI) data for December, up for publishing on Wednesday.

Amid these plays, US stock futures print mild gains while the US 10-year Treasury yields extend the previous day’s pullback from the yearly top, down 2.3 basis points (bps) near 1.757% at the latest.

Looking forward, AUD/USD pair traders will keep their eyes on the Fed Chair Powell’s Testimony for further insights on rate hikes, which in turn can weigh on the Aussie prices. However, the market reaction, via yields and equities, will be important to watch for clear direction.

Technical analysis

Monday’s Doji candlestick below the 20-DMA hurdle of 0.7200 joins steady RSI and sluggish MACD to keep sellers hopeful of retesting the 0.7100 threshold.