AUD/USD rebounds from 0.6400 even Fed Powell delivers hawkish guidance

• AUD/USD recovers from 0.6400 amid improved market sentiment.
• The Aussie Employment data will guide market expectations for RBA rate cuts.
• It is forecasted that Australian employers hired mere 7.2K workers in March.

The AUD/USD pair finds a cushion near the round-level support of 0.6400 in Wednesday’s early American session. A three-day losing spell in the Aussie asset has concluded for now as investors expect that nations other than the United States are also facing stubborn inflation issues.

The Consumer Price Index (CPI) data for the United Kingdom and the New Zealand economies released in Wednesday’s session indicated that the last mile for inflation to return to the 2% target is bumpy. UK’s inflation softened slower than estimated in March while NZ inflation grew as expected in the first quarter of 2024.

This has forced traders to reprice their expectations for initial rate cuts. For the Bank of England (BoE) and the Reserve Bank of New Zealand (RBNZ), investors are now expecting that they will pivot to rate cuts from the November meeting instead of September.

Meanwhile, the market sentiment has improved. Considering bullish overnight futures, the S&P 500 is expected to open on a positive note. 10-year US Treasury yields fall slightly to 4.64% after refreshing a five-month high at 4.7%. The US Dollar Index (DXY) turns sideways after printing a fresh five-month high at 106.40. The US Dollar holds strength as Federal Reserve (Fed) Chair Jerome Powell leaned for keeping interest rates higher for a longer period as inflation data for March was not encouraging.

On the Australian Dollar front, investors await the Employment data for March, which will be published on Thursday. The Unemployment Rate is forecasted to have increased to 3.9% from 3.7% in February. In the same period, Australian employers are estimated to have hired 7.2K workers, significantly lower from 116.5K. Weak employment numbers would lift expectations for rate cuts by the Reserve Bank of Australia (RBA).