AUD/USD begins the week with extending losses, trades around 0.6560

AUD/USD kicks off the week with extending losses for the second successive session, with the pair trading lower around 0.6560 during the Asian session on Monday. The US Dollar (USD) strengthens, supported by higher US Treasury yields, thereby exerting downward pressure on the AUD/USD pair.

The US Dollar Index (DXY) trades around 104.40, at the time of writing, propelled by a surprising beat from the Nonfarm Payrolls (NFP) report. The robust labor market performance, highlighted by the March report surpassing expectations, reinforces the bullish outlook for the US Dollar.

Despite the positive momentum in the US economy, the likelihood of a rate cut in June from the Federal Reserve (Fed) remains high. The market continues to project a June rate cut with approximately a 70% likelihood, followed by an estimated total easing of roughly 75 basis points (bps) throughout 2024.

The US Bureau of Labor Statistics (BLS) reported a significant increase of 303,000 jobs in March, surpassing the expected 200,000. However, February's previous Nonfarm Payrolls (NFP) growth of 275,000 was revised downward to 270,000. Additionally, US Average Hourly Earnings rose by 0.3% month-over-month in March, meeting expectations. The previous reading was 0.2%. On a yearly basis, there was an increase of 4.1%, aligning with the market consensus but slightly lower than the previous reading of 4.3%.

Market participants are likely closely monitoring higher copper and oil prices, which could potentially provide support for the Australian Dollar (AUD). The Australian Dollar (AUD) faced challenges following the release of unchanged Final Retail Sales and downbeat Trade Balance data from Australia on Friday.

Australia recorded its smallest Trade Surplus in five months in February, attributed to a decrease in iron ore exports. In March, the Reserve Bank of Australia (RBA) maintained its cash rate at a 12-year high of 4.35% for the third consecutive meeting. However, the RBA omitted a previous warning that further rate hikes could not be ruled out.