AUD/USD remains depressed below mid-0.6600s; downside seems limited ahead of US NFP report
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AUD/USD remains depressed for the fourth consecutive day amid a combination of negative factors.
Last week’s mixed Aussie jobs data, China economic woes, and a softer risk tone weigh on the AUD.
The divergent RBA-Fed policy expectations limit losses as traders await the delayed US NFP report.
The AUD/USD pair attracts some sellers for the fourth straight day on Tuesday and trades around the 0.6630 region, down just over 0.10%, during the Asian session.
Against the backdrop of last Thursday's mixed Australian employment details, disappointing Chinese macro data released on Monday revied concerns about the health of the world's second largest economy. This, along with a weaker tone around the global equity markets, is seen weighing on the perceived riskier Australian Dollar (AUD) and the AUD/USD pair.
However, the Reserve Bank of Australia's (RBA) hawkish stance limits deeper AUD losses. In fact, RBA Governor Michele Bullock said last week that it looks like more rate cuts are not needed and added that the Board discussed what they might have to do if rates need to go up. This, along with sustained US Dollar (USD) selling, offers support to the AUD/USD pair.
The USD Index (DXY), which tracks the Greenback against a basket of currencies, languishes near its lowest level since October 7 amid rising bets for more interest rate cuts by the Federal Reserve (Fed). Furthermore, expectations for a dovish replacement of Fed Chair Jerome Powell keep the USD bulls on the defensive and could act as a tailwind for the AUD/USD pair.
Traders also seem reluctant and might opt to wait for this week's important macro data, starting with the delayed US Nonfarm Payrolls (NFP) report for October, before placing aggressive directional bets. Hence, it will be prudent to wait for strong follow-through selling before confirming that the AUD/USD pair's three-week-old uptrend has run out of steam.
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