AUD/USD holds positive ground near 0.6400 as traders await RBA rate decision
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AUD/USD trades in positive territory near 0.6400 in Monday’s early Asian session.
US Nonfarm Payrolls was stronger than expected in November, rising by 227,000 vs. 36,000 prior.
The RBA is expected to hold the interest rate steady at 4.35% at its meeting on Tuesday.
The AUD/USD pair gains ground to around 0.6400 on the weaker US Dollar (USD) during the Asian session on Monday. There are no Federal Reserve (Fed) speakers this week due to the media blackout. All eyes will be on the Reserve Bank of Australia (RBA) interest rate decision on Tuesday, with no change in rates expected.
Data released by the US Bureau of Labor Statistics (BLS) on Friday showed that the US Nonfarm Payrolls (NFP) increased by 227,000 in November, compared with an upwardly revised 36,000 in October. This reading came in better than the estimation of 200,000. Meanwhile, the Unemployment Rate ticked up to 4.2% in November from the previous reading of 4.1%.
Several Fed officials have spoken over the past few weeks, and there is near unanimity that the labor market is cooling but healthy. The Greenback edged lower with the immediate reaction to Nonfarm Payrolls data. Financial markets are now pricing in nearly 70% odds of a 25 basis points (bps) rate cut by the Federal Reserve (Fed) at the upcoming meeting on December 17-18, according to the CME FedWatch tool.
On the Aussie front, the Australian central bank is anticipated to keep the benchmark interest rate steady at 4.35%. RBA Governor Bullock said earlier this month that “underlying inflation is still too high to be considering lowering the cash rate target in the near term.” However, Australia’s Q3 GDP growth report was weak and suggests a dovish surprise cannot be ruled out.
The market has brought forward the timing of the first rate cut to April versus May before. Market players will keep an eye on the RBA Press Conference. The dovish comments from the policymakers could exert some selling pressure on the Aussie against the USD.
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