AUD/USD jumps to near 0.6670 as Fed dovish bets improve market mood

AUD/USD advances to near 0.6670 as the market sentiment remains upbeat amid Fed dovish bets.
The Fed is widely anticipated to cut interest rates on Wednesday.
Investors await key US Retail Sales and the Australian employment data.

Sagar Dua FXStreet

The AUD/USD pair climbs to near 0.6670 during the European trading session on Monday. The Aussie pair strengthens as the Australian Dollar (AUD) outperforms its peers amid strong appeal for risk-sensitive assets due to firm expectations that the Federal Reserve (Fed) will start the monetary-easing campaign on Wednesday.

Australian Dollar Price Today

The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the US Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.00%	-0.22%	-0.15%	-0.02%	-0.26%	-0.16%	-0.02%
EUR	-0.00%		-0.20%	-0.19%	-0.01%	-0.21%	-0.20%	-0.03%
GBP	0.22%	0.20%		0.06%	0.19%	-0.01%	0.00%	0.06%
JPY	0.15%	0.19%	-0.06%		0.11%	-0.07%	-0.03%	0.14%
CAD	0.02%	0.01%	-0.19%	-0.11%		-0.14%	-0.19%	-0.13%
AUD	0.26%	0.21%	0.01%	0.07%	0.14%		0.01%	0.16%
NZD	0.16%	0.20%	0.00%	0.03%	0.19%	-0.01%		0.07%
CHF	0.02%	0.03%	-0.06%	-0.14%	0.13%	-0.16%	-0.07%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).

S&P500 futures trade higher during European trading hours, demonstrating upbeat market sentiment. Meanwhile, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades marginally lower to near 97.50.

Market experts have expressed confidence that the Fed will cut interest rates on Wednesday and anticipates further monetary-easing in the remainder of the year amid growing labor market risks. Analysts at Morgan Stanley have forecasted that the Fed will cut interest rates by 25 basis points (bps) in all three remaining monetary policy announcements this year, citing downside labor market risks, with threats of high inflation remaining in place.

This week, investors will also focus on the United States (US) Retail Sales data for August, which will be released on Tuesday. The Retail Sales data is estimated to have grown at a moderate pace of 0.3%.

In Australia, investors await the employment data for August, which is scheduled for Thursday. The Unemployment Rate is seen steady at 4.2%. The economy is expected to have added 21.2K fresh workers, slightly lower than the prior reading of 24.5K. Signs of steady job market will likely weigh on market expectations of supporting interest rate cuts by the Reserve Bank of Australia (RBA) in the policy meeting later this month.

Economic Indicator

Fed Interest Rate Decision

The Federal Reserve (Fed) deliberates on monetary policy and makes a decision on interest rates at eight pre-scheduled meetings per year. It has two mandates: to keep inflation at 2%, and to maintain full employment. Its main tool for achieving this is by setting interest rates – both at which it lends to banks and banks lend to each other. If it decides to hike rates, the US Dollar (USD) tends to strengthen as it attracts more foreign capital inflows. If it cuts rates, it tends to weaken the USD as capital drains out to countries offering higher returns. If rates are left unchanged, attention turns to the tone of the Federal Open Market Committee (FOMC) statement, and whether it is hawkish (expectant of higher future interest rates), or dovish (expectant of lower future rates).

GBP/USD loses momentum, flirts with 1.3200

GBP/USD is struggling to maintain its positive bias on Thursday, retreating toward the 1.3200 region in response to the pick in the buying interest around the Greenback. That said, Cable remains under scrutiny as cautious market sentiment keeps investors focused on the US-Iran conflict and political effervescence in the UK.

EUR/USD trims gains, challenges 1.1400

EUR/USD now gives away part of its earlier advance, receding toward the 1.1400 contention zone on Thursday. Meanwhile, the pair’s recovery comes amid extra losses in the US Dollar, at the time when while investors continue to monitor developments in the Middle East and sentiment surrounding global technology stocks.

Gold remains bid and close to $4,100

Gold accelerates its recovery and approaches the key $4,000 mark per troy ounce at the end of the week, adding to Thursday’s advance. However, expectations for a hawkish Fed remain steady and keep the yellow metal’s potential upside contained.

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Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) are trading in the red on Friday after three consecutive days of losses, testing their respective make-or-break support levels.

Week ahead – NFP report to challenge Dollar strength and the hawkish Fed

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