AUD/USD recovers as US Dollar consolidates gains, Fed Powell’s speech in focus

AUD/USD bounces back as the US Dollar gives await its entire intraday gains.
The market mood remains uncertain ahead of Fed Powell’s speech.
RBA officials considered further policy-tightening in June but ended keeping interest rates unchanged.

Sagar Dua FXStreet

The AUD/USD pair rebounds sharply after correcting to near 0.6630 in Tuesday’s American session. The Aussie asset recovers as the US Dollar (USD) gives away its entire gains generated due to uncertainty ahead of the Federal Reserve (Fed) Chair Jerome Powell’s speech scheduled at 13:30 GMT.

Market sentiment remains risk-averse as Fed Powell will provide fresh cues about when the central bank will start reducing interest rates. S&P 500 futures have posted significant losses in the early New York session. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, retreats to near 105.80.

Investors will keenly focus on Fed Powell’s speech to know about when the Fed will start reducing interest rates. In June’s monetary policy, Fed Powell acknowledged decline in May’s inflation as “encouraging” but reiterated that they need more good data before pivoting to rate cuts.

This week, the major trigger for the US Dollar will be the United States (US) Nonfarm Payrolls (NFP) data for June, which will be published on Friday. The NFP report will indicate the current status of labor demand and the wage growth, which will provide fresh outlook on inflation.

Meanwhile, the Australian Dollar is broadly under pressure even though Reserve Bank of Australia (RBA) minutes for the June meeting were hawkish. Policymakers considered raising interest rates further due to stubbornly higher inflation but ended keeping the Official Cash Rate (OCR) unchanged at 4.35%. Currently investors expect that the RBA would choose the April 2025 as the earliest point to start lowering interest rates.

Economic Indicator

RBA Meeting Minutes

The minutes of the Reserve Bank of Australia meetings are published two weeks after the interest rate decision. The minutes give a full account of the policy discussion, including differences of view. They also record the votes of the individual members of the Committee. Generally speaking, if the RBA is hawkish about the inflationary outlook for the economy, then the markets see a higher possibility of a rate increase, and that is positive for the AUD.

Why it matters to traders?

The Reserve Bank of Australia (RBA) publishes the minutes of its monetary policy meeting two weeks after the interest rate decision is announced. It provides a detailed record of the discussions held between the RBA’s board members on monetary policy and economic conditions that influenced their decision on adjusting interest rates and/or bond buys, significantly impacting the AUD. The minutes also reveal considerations on international economic developments and the exchange rate value.

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

AUD/USD sits near a one-month top, above 0.7000 amid fresh USD selling

AUD/USD holds above 0.7000 through the Asian session, trading near a one-month high touched earlier this Monday amid renewed US Dollar selling. US bond yields decline further amid a modest pullback in crude oil prices, capping the USD recovery from a three-week low. Moreover, bets for a November RBA rate hike support the Aussie, though upside seems capped ahead of the crucial two-day FOMC meeting, starting Tuesday.

USD/JPY struggles below 157.00 on weak USD; holds above one-month low ahead of Fed, BoJ meetings

USD/JPY attracts fresh sellers during the Asian session on Monday, stalling its recovery from the lowest level since September 18, touched Friday as a further decline in US bond yields weighs on the US Dollar. Meanwhile, the Japanese Yen benefits from a more hawkish BoJ, further weighing on the currency pair. The downside, however, seems limited as traders keenly await Fed and BoJ policy meetings later this week.

Gold holds on just above $4,000

Gold clings to daily gains, leaving behind two daily drops in a row and reclaiming the key $4,000 mark per troy ounce and above on Monday. The better tone in the US Dollar and mixed US Treasury yields accompany the precious metal’s uptick, while declining crude oil prices appear to sustain the bounce for now.

Bitcoin stalls around $80,000 as geopolitical tensions dampen risk appetite

Bitcoin hovers around $80,500 on Monday after three straight weeks of correction. Rising geopolitical tensions in the Middle East continue to push oil prices higher, stoking inflation concerns and dampening risk appetite.

Everyone's bracing for a hawkish central bank week. Here's why the surprise could be dovish

Five of the world's major central banks are preparing to announce monetary policy decisions this week, with investors increasingly anticipating higher interest rates as the global energy shock continues to push inflation above target.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.