AUD/USD juggles around 0.6900, downside remains favored on hawkish Fed bets

The AUD/USD pair is likely to remain sideways around 0.6900 as investors are betting more on the extremely hawkish stance of the Federal Reserve (Fed) going forward. The asset bounced back after printing a fresh weekly low on Friday at 0.6869 as the US Bureau of Labor Statistics reported an outperformance labor market data.

The US Nonfarm Payrolls (NFP) landed at 528k, significantly higher than the expectations of 250k and the prior release of 372k. Investors were expecting that commentary from US corporate players citing a halt in the recruitment process after the US Fed hiked interest rates to squeeze liquidity from the market will make the US economy crippled in employment generation.

The US economy is seeing soaring price pressures and a solid labor market has always been a major supporting factor in announcing policy tightening measures. Now, the continuous upbeat performance from the US labor market will support Fed chair Jerome Powell to announce rate hikes unhesitatingly. Also, the Unemployment Rate has trimmed to 3.5% against expectations and the former print of 3.6%.

On the Australian front, a likely reversion to 25 basis points (bps) Official Rate Hike (OCR) by the Reserve Bank of Australia (RBA) may restrict the aussie bulls. According to analysts at Wells Fargo, the RBA will likely raise again its OCR in September but with a 25 bps rate hike. They see the rate peak at 3.10% by early next year. Earlier, the RBA announced three consecutive OCR hikes by 50 bps.