AUD/USD jumps close to 0.6440 as risk-on mood dampens US Dollar appeal

• AUD/USD climbs close to 0.6440 as market sentiment improves.
• The demand for the US Dollar dampens as investors hope that the Fed is done with hiking interest rates.
• RBA monetary policy and the US NFP data will be keenly watched.

The AUD/USD pair jumps sharply towards 0.6440 as the US Dollar faces an intense sell-off. The US Dollar fell vertically to near 105.80 on disappointment from the US data and a steady interest rate policy from the Federal Reserve (Fed).

The S&P500 has opened on a bullish note amid optimism that the Fed is done with hiking interest rates. Fed Chair Jerome Powell kept expectations of one more interest rate increase alive as a resilient US economy could keep price pressures persistent.

Market mood has improved significantly while the US Dollar Index (DXY) has dropped significantly. 10-year US Treasury yields have plunged more than 3% to 4.67%, at the press time. While discussing rate cuts, in his monetary policy statement, Jerome Powell said that the central bank is not looking to lower interest rates but added that "It’s fair to say the question we’re asking is should we hike more” as officials weigh how they can guide inflation back to the 2% target.

Going forward, investors will focus on the Nonfarm Payrolls (NFP) data for September, which will be published on Friday. As per the consensus, employers hired 180K job seekers in October against the former release of 336K. The Unemployment Rate is seen unchanged at 3.8%.

On the Australian Dollar front, investors shift focus to the interest rate decision by the Reserve Bank of Australia (RBA), which will be announced on Tuesday. Investors hope that the RBA could raise interest rates by 25 basis points (bps) to 4.35% as inflation turns out persistent in the third quarter of 2023.