AUD/USD dribbles around 0.6900 as traders await Aussie Trade Balance, China Inflation

• AUD/USD awaits fresh clues to extend recent gains, eyes fourth weekly upside.
• Dovish Fed talks, upbeat Aussie data allowed bulls to keep the reins.
• Wait for inflation data from China, US joined light calendar elsewhere to restrict moves.
• Markets anticipate mixed data but improvement in China CPI could favor bulls.

AUD/USD portrays pre-data anxiety as it struggles to extend the previous day’s run-up, taking rounds to 0.6900 during the initial hours of Thursday’s Asian session. Even so, the Aussie pair stays on the way to post four consecutive weekly gains while staying around the highest levels since late August 2022.

The quote’s latest gains could be linked to the market’s cautious optimism amid the risk-positive headlines surrounding China, as well as receding fears of hawkish Fed actions. Adding strength to the AUD/USD upside could be the recently firmer data from Australia.

That said, Australia’s seasonally adjusted Retail Sales grew 1.4% MoM versus 0.6% expected and -0.2% prior while the Monthly Consumer Price Index rose 7.4% compared to -5.7% market forecasts and -3.9% previous readings.

Elsewhere, Federal Reserve’s Boston representative Susan Collins reiterated her support for the smaller rate increases. The policymaker said that she leans at this stage to a 25 bps hike. However, she also mentioned that it is very data-dependent.

Talking about China, the dragon nation’s total reopening and early signals of heavy holiday shopping join the chatters that the People’s Bank of China (PBOC) will adhere to rate cuts in 2023 to spread the Beijing-inspired optimism. On the same line, the recent improvement in the Sino-Aussie ties also helps AUD/USD to remain firmer.

It should be observed that the easing of the US Treasury bond yields and an upbeat performance by equities also added strength to the AUD/USD upside, due to the pair’s risk-barometer status.

On Wednesday, the US 10-year Treasury yields dropped nearly eight basis points (bps) 3.54% while Wall Street closed in the green.

Moving on, Australian trade numbers for November will precede China’s inflation data for December to direct immediate AUD/USD moves. Given the likely easing in the Aussie Trade Balance to 10,500M versus 12,217M prior, the quote may witness a pullback in the initial hours before the expectedly firmer China Consumer Price Index (CPI) and Producer Price Index (PPI) figures could favor the bulls. Above all, US CPI will be crucial as the Fed hawks run out of steam.

Technical analysis

AUD/USD grinds higher between a two-month-old resistance line and the 200-DMA, respectively near 0.6960 and 0.6830.