The AUD/USD pair trades on a softer note around 0.6735, snapping the two-day losing streak during the European session on Friday. The markets turn cautious ahead of the US employment reports on Friday.
The Australian Dollar (AUD) weakens on the day despite the softer Greenback and the hawkish comments from Reserve Bank of Australia (RBA) Governor Michele Bullock. RBA’s Bullock said on Thursday, “If the economy evolves broadly as anticipated, the board does not expect that it will be in a position to cut rates in the near term.”
On the other hand, investors see the US Federal Reserve (Fed) start easing its monetary policy at its upcoming meeting in September. The CME FedWatch tool showed that the markets are now pricing in a nearly 59% chance of a 25 basis points (bps) Fed rate cut in September, while the possibility of a 50 bps rate cut stands at 41%.
The disappointing ADP Employment Change data on Thursday weighs on the USD against the AUD. Automatic Data Processing (ADP) revealed on Thursday that private sector employment increased by 99,000 in August, followed by the 111,000 (revised from 122,000) increase reported in July and below the consensus of 145,000 by a wide margin.
Investors will closely watch the US employment data on Friday as it might offer some cues about the size and pace of the Fed easing rate cycle. Investors estimate NFP to rise 160,000 in August following the 114,000 increase seen in July. The Unemployment Rate is projected to edge lower to 4.2% in August. The weaker readings might prompt a 50 bps rate cut by the Fed, which exerts some selling pressure on the US Dollar. More By This Author:USD/CHF Remains Firm Above 0.8500 After Swiss GDP And CPI Inflation Data USD/CHF Weakens Below 0.8500, Eyes On Swiss CPI, GDP Data USD/CHF Recovers Above 0.8450, US PCE Inflation Data In Focus
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