- AUD/USD drops to near 0.6660 as investors are expected to make informed positions after the US NFP report for May.
- The Fed is expected to start reducing interest rates from September.
- Investors see the RBA holding interest rates steady by the year-end.
The AUD/USD pair falls back to 0.6660 while attempting to capture the round-level resistance of 0.6700 in Friday’s London session. The Aussie asset faces pressure as uncertainty ahead of the release of the United States Nonfarm Payrolls (NFP) report for May limits the upside in risk-perceived assets.
The market sentiment turns cautious as the US NFP report is expected to influence market expectations for the Federal Reserve (Fed) rate cuts. S&P 500 futures have turned negative after erasing entire overnight gains, indicating a decline in investors’ risk-appetite. The US Dollar Index (DXY) remains sideways near the crucial support of 104.00.
The US Employment report is expected to show that employers added 185K payrolls, higher than the prior release of 175K. The Unemployment Rate is estimated to have remained steady at 3.9%. Investors will also pay attention to the Average Hourly Earnings data, which gauges wage growth momentum. Annual Average Hourly Earnings are forecasted to have grown steadily by 3.9%. While monthly wage growth is estimated to have risen at a higher pace of 0.3% from the former release of 0.2%.
Upbeat payrolls and wage growth data would diminish hopes of the Fed lowering its interest rates from the current levels. The CME FedWatch tool shows that the Fed would choose the September meeting as the earliest point to start unwinding the restrictive interest rate stance. While soft figures would boost Fed rate-cut expectations for September.
Meanwhile, the Australian Dollar holds gains as the Reserve Bank of Australia (RBA) appears to list as those central banks that are not expected to deliver rate cuts this year. The expectations for RBA rate cuts waned after RBA Governor Michele Bullock delivered hawkish guidance on the interest rate outlook on Wednesday. Bullock indicated that the central bank is prepared to increase interest rates further if inflation doesn’t return to the target range of 1%-3%. Apart from the RBA, the Reserve Bank of New Zealand (RBNZ) is also expected to consider rolling back its tight interest-rate stance next year.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD jumps back above 1.1000 on renewed US Dollar sell-off
EUR/USD is posting sizeable gains above 1.1000 in early Europe on Monday. EU prepares for retaliatory tariffs and rekindles the global trade war and US recession fears, drowning the US Dollar again aross the board. Traders now look to the EU Sentix and Retail Sales data.
GBP/USD holds recovery gains above 1.2900 amid fresh US Dollar weakness
GBP/USD clings to recovery gains above 1.2900 in European trading on Monday. The pair capitalizes on renewed US Dollar weakness as risk sentiment takes a fresh hit, with European traders hitting their desks. Trump's tariffs-led US recession fears and dovish Fed bets keep the USD undermined.
Gold price rebounds swiftly from multi-week low; lacks follow-through
Gold price reverses an Asian session slide to over a three-week low, though it lacks follow-through. Recession fears continue to weigh on investor sentiment and benefit the safe-haven commodity. Bets for more aggressive Fed rate cuts undermine USD and also lend support to the XAU/USD pair.
Crypto market wipes out $1 billion in liquidation as Asian markets bleed red
The crypto markets continue to decline on Monday, with Bitcoin falling below $78,000. The Asian markets also traded in the red, with Japan’s stock market extending losses to 8.5%, its lowest level since October 2023.
Strategic implications of “Liberation Day”
Liberation Day in the United States came with extremely protectionist and inward-looking tariff policy aimed at just about all U.S. trading partners. In this report, we outline some of the more strategic implications of Liberation Day and developments we will be paying close attention to going forward.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.