Ella 
In early Asian trading on Tuesday, the Australian dollar/US dollar rose, consolidating its recent gains around 0.6430. AUD/USD rebounds on USD weakness and improving risk sentiment. Meanwhile, the U.S. dollar index is hovering around 104.50 after pulling back from around 105.00.
The Australian dollar rose on inflation data from China. China’s consumer price index (CPI) increased at an annual rate of 0.1%, compared with the previous value of -0.3%, and was expected to increase by 0.2%. The monthly rate was 0.3%, in line with expectations. Rising inflation data from China boosted risk sentiment, sending the safe-haven dollar lower.
In the U.S. dollar, investors are awaiting closely watched U.S. consumer price index (CPI) data, which may confirm the Federal Reserve’s (FED) interest rate outlook. Better inflation data would signal the need for the Fed to tighten monetary policy. This in turn will boost the USD against major currency pairs.
After the G20 summit, U.S. Treasury Secretary Janet Yellen expressed more optimistic expectations for the United States to control inflation without damaging the job market. Yellen also said last Sunday that all indicators of inflation were declining and there was no large-scale layoffs. Chicago Fed President Austan Goolsbee outlined the central bank’s goal of guiding the economy onto a “golden path.” In addition, New York Fed President John Williams also emphasized last week that inflation has declined and the economic balance has improved.
Market participants are awaiting an Australian sentiment survey due later on Tuesday. The Westpac Consumer Confidence Index is expected to be 0.6%. The Australian Business Bank’s business confidence index is expected to fall to 1 in August from -2 in July. Later this week, the US Consumer Price Index (CPI) and Producer Price Index (PPI) will be released on Wednesday and Thursday respectively. Traders will look to this data for AUD/USD trading opportunities.
