AUD/USD rebounds strongly as US Dollar faces pressure despite stubborn CPI report

The AUD/USD pair discovers buying interest near 0.6380 as investors see the United States Consumer Price Index (CPI) report for August as insufficient to encourage Federal Reserve (Fed) policymakers to raise interest rates one more time in the rest of the year.

S&P500 opens on a slightly positive note as investors hope that the Fed will keep interest rates unchanged at 5.25-5.50% till the year-end. The US Dollar Index (DXY) delivers a volatile action as the United States inflation turned out stickier than expectations.

US headline inflation expanded at a 0.6% pace as anticipated by market participants. Core CPI that excludes volatile oil and food prices expanded by 0.3%, higher than estimates and July's reading of 0.2%. The US headline CPI, on an annual basis, accelerated to 3.6% from expectations of 3.6% and the prior release of 3.2%. Core CPI matched expectations of 4.3% in a similar period, remaining below the former reading of 4.7%.

According to the CME Fedwatch Tool, traders see a 97% chance in favor of an unchanged monetary policy vs. a 93% chance before the US inflation data release for the September monetary policy meeting.

On the Australian Dollar front, investors await the labor market data for August, which will be published on Thursday at 01:30 GMT. As per the expectations, Aussie employers recruited 23K job-seekers vs. 14.6 lay-offs recorded in July. The Unemployment Rate is seen unchanged at 3.7%. Tight labor market conditions could force Reserve Bank of Australia (RBA) policymakers to discuss more about resuming the policy-tightening spell.