- In early Asian trading on Friday, AUD/USD was trading modestly higher around the 0.6670 level.
- Weak U.S. employment data this week has led to growing expectations that the Fed will cut interest rates in September.
- The RBA’s Bullock said the central bank would not hesitate to raise interest rates again if inflation remained high.
In early Asian trading on Friday, the AUD/USD pair is trading modestly higher around 0.6670. Growing speculation of a US Federal Reserve (Fed) interest rate cut and softening US economic data are weighing on the US Dollar (USD) and providing a boost to AUD/USD. Later on Friday, US Non-Farm Payrolls (NFP) data for May will be in focus.
Weak U.S. economic data this week has buoyed expectations of a Fed rate cut in September. Traders now see about a 68% chance of a rate cut at the September meeting, up from 50% at the start of the week, according to the CME FedWatch tool.
The Labor Department said Thursday that the number of Americans filing for unemployment benefits in the week ending May 31 rose by 8,000 to 229,000 from 221,000 the previous week, beating the forecast of 220,000. Earlier this week, the U.S. manufacturing PMI came in below expectations, falling to 48.7 in May from 49.2 in April.
Meanwhile, the Australian dollar (AUD) received some support after Reserve Bank of Australia (RBA) Governor Michelle Bullock took a more hawkish stance on Wednesday. She said the central bank’s Plan A remains “data-driven” and that it will maintain a neutral stance for now. However, stronger-than-expected inflation would force the central bank to raise interest rates again.
