Australian Dollar extends losses on softer Consumer Confidence, upbeat US Dollar

• Australian Dollar moves on a downward trajectory as US Dollar strengthens.
• Australian Consumer Confidence declined by 1.3% in January against the 2.7% prior.
• Fed Bostic warned that inflation may waver in the upcoming months.
• Upbeat US bond yields contributed support to underpinning the Greenback.

The Australian Dollar (AUD) continues its losing streak on Tuesday which began on January 9. The AUD/USD pair faces downward pressure after the Westpac Consumer Confidence data for January showed a contraction. This development might contribute to the sentiment that there will be no further policy tightening from the Reserve Bank of Australia (RBA) in its upcoming board meeting in February.

Australia's Consumer Confidence, released by the Faculty of Economics and Commerce Melbourne Institute, declined by 1.3% compared to the previous increase of 2.7%. However, on Monday, the TD Securities Inflation data showed a rise in December, which might have limited the losses of the Aussie Dollar.

The US Dollar Index (DXY) began the Tuesday session with a gap-up, supported by upbeat US Treasury yields. Investors' confidence in the US Dollar (USD) appears to be returning following hawkish remarks by Atlanta Federal Reserve (Fed) President Raphael Bostic over the weekend.

According to the Financial Times, President Bostic suggested that inflation could "see-saw" if policymakers cut interest rates too soon. He warned that the descent of inflation toward the central bank's 2.0% goal was likely to slow in the months ahead.

Traders will likely keep an eye on the NY Empire State Manufacturing Index on Tuesday, with an expected decline to 5 compared to the previous reading of 14.5. Additionally, Chinese Gross Domestic Product (GDP) and Retail Sales data are scheduled for Wednesday.

Daily Digest Market Movers: Australian Dollar loses ground as the US Dollar improves

• Australian TD Securities inflation increased by 5.2% YoY in December from 4.4% in November.
• Australia's job advertisements improved by 0.1% in December, swinging from the previous decline of 4.6%.
• People's Bank of China (PBoC) maintained the rate on its medium-term facility steady at 2.5%, increasing the expectation that the Reserve Requirement Ratio will be reduced the following month.
• Chinese Consumer Price Index (YoY) decreased by 0.3% in December, against the expected 0.4% decline. The monthly Consumer Price Index eased at 0.1%, compared to the market expectation of 0.2%. The yearly Producer Price Index fell by 2.7%, slightly exceeding the expected decline of 2.6%.
• Barclays revised its forecast for the first Federal Reserve (Fed) rate cut on Friday, moving it up to March from June. In a note released on Friday, Barclays analysts expressed their expectation for the Federal Open Market Committee (FOMC) to reduce the Fed Funds rate by 25 basis points at the March meeting.
• US Bureau of Labor Statistics reported that the December Producer Price Index (PPI) figure was 1.0% year-on-year, compared to the previous reading of 0.8%. The Core PPI YoY arrived at 1.8%, down from 2.0% in November. Monthly, the headline and Core PPI indices remained flat at -0.1% and 0.0%, respectively.
• US Bureau of Labor Statistics reported that the Consumer Price Index (CPI) surged to 3.4% YoY in December, exceeding both November's 3.1% and the anticipated market figure of 3.2%. The monthly CPI growth for December showed a 0.3% increase, surpassing the market analysts' estimated projection of 0.2%. The annual Core CPI stood at 3.9%, a slight decrease from November's 4.0%, while the monthly figure remained steady at 0.3%, in line with expectations.

Technical Analysis: Australian Dollar moves below the major level at 0.6650

The Australian Dollar trades near 0.6620 on Tuesday, positioned above psychological support at 0.6600 following the 50% retracement level at 0.6566 and major support at 0.6550. On the upside, the major barrier appears at the 0.6650 level following the 14-day Exponential Moving Average (EMA) at 0.6699 aligned with the psychological level at 0.6700.

AUD/USD: Daily Chart