AUD/USD extends bounce off multi-day low towards 0.6800 on upbeat Australia Retail Sales

• AUD/USD picks up bids to stretch the week-start rebound from seven-week low.
• Australia Retail Sales rose more than expected in January with 1.9% MoM growth.
• Risk-on mood, mixed US data and month-end positioning add strength to corrective bounce.
• Second-tier US statistics eyed for clear directions, risk catalysts are important too.

AUD/USD bulls cheer strong Australia Retail Sales to extend the week-start recovery towards 0.6750 during early Tuesday. In doing so, the Aussie pair also cheers risk-on mood, as well as softer US Treasury bond yields and mixed data.

That said, Australia’s seasonally adjusted Retail Sales rose 1.9% MoM versus 1.5% market forecasts and -3.9% previous readings, which in turn allowed the Aussie pair to refresh intraday high near 0.6750.

Apart from the upbeat Aussie data, trade-positive headline from the White House also seems to underpin the AUD/USD pair’s recovery, mainly due to the pair’s risk-barometer status.

That said, the US offers an olive branch to China companies despite its political differences with the dragon nation and hence allows the S&P 500 Futures to track Wall Street’s gains by the press time.

“Despite fraying relations with Beijing, US President Joe Biden is expected to forego expansive new restrictions on American investment in China, denying a push by some hawks in his administration and in Congress,” reported Politico late Monday.

Even so, the geopolitical woes, as well as the hawkish Fed talks, not to forget the looming concerns surrounding the Australia recession, seem to keep the AUD/USD sellers hopeful.

It’s worth noting that piece from Bloomberg cited risks of Australia recession by saying, “Reserve Bank of Australia chief Philip Lowe’s expectation of further interest-rate rises ahead has prompted economists and money markets to narrow the odds of a recession in the $1.5 trillion economy.”

On the other hand, Federal Reserve Governor Philip Jefferson said on Monday that it is important to get back to 2% inflation to allow those sorts of sustained economic gains. Reuters also portrayed hawkish Fed concerns while saying, “Economic data this month reflected still tight jobs markets and inflation remaining sticky, leading Fed funds futures traders to bet on higher rates, which in the US are now seen peaking in September at 5.4%, up from 4.58% now.”

It should be noted that mixed US data joined the month-end consolidation to help the AUD/USD pair recover from the previous monthly low on Monday. That said, US Durable Goods Orders slumped -4.5% in January versus -4.0% expected and 5.1% prior. However, the Nondefense Capital Goods Orders ex Aircraft grew 0.8% versus 0.0% analysts’ expectations and -0.3% previous readings. On the same line, the US Pending Home Sales rallied 8.0% MoM versus 1.0% expected and 1.1% prior.

Looking ahead, AUD/USD traders should pay attention to the risk catalysts, as well as the second-tier US data relating to consumer sentiment and manufacturing activity, for intraday directions. However, major attention will be given to Wednesday’s Australia Gross Domestic Product (GDP) for the fourth quarter (Q4).

Technical analysis

Despite a successful recovery from the three-month-old ascending support line, close to 0.6720 by the press time, AUD/USD buyers need validation from the 200-DMA resistance of around the 0.6800 round figure to keep the reins.