AUD/USD consolidates daily losses near 0.6750 ahead of key CPI data

• NAB data shows Business Confidence continues to deteriorate in Australia.
• US Dollar Index advances above 98 on Tuesday.
• Coming up: Consumer Price Index (CPI) data from Australia.

The AUD/USD pair edged lower on Tuesday and touched its weakest level since mid-October at 0.6737 before staging a technical rebound in the second half of the day. As of writing, the pair was consolidating its daily losses near 0.6750, erasing 0.15% on a daily basis.

Eyes on RBA's inflation report

Earlier in the day, the National Australia Bank's monthly survey revealed that the Business Confidence Index in December dropped to -2 from 0 in November and the Business Conditions Index eased to 3 from 4 in the same period to hurt the AUD. Moreover, concerns over the coronavirus having a significant negative impact on the Chinese economy put additional weight on China-proxy AUD's shoulders. 

In the early trading hours of the Asian session on Wednesday, the Australian Burau of Statistics will release its Consumer Price Index data for the fourth quarter. More importantly, the Reserve Bank of Australia (RBA) will publish its quarterly inflation report as well

Markets expect the RBA's Trimmed Mean CPI to come in at 1.5% on a yearly basis and a lower-than-expected reading could hurt the AUD as it would suggest that the RBA could remain dovish without worrying about inflation shooting over their target range.

On the other hand, the greenback continued to find demand as a safer-alternative against most major currencies and the US Dollar Index looks to close the day above the 98 handle for the first time since early December. The data from the US showed that Durable Goods Orders rose 2.4% in December following November 3.1% drop but Core Durable Goods Orders, non-defense capital goods excluding aircraft, declined 0.9%.

Technical levels to watch for