- AUD/USD is looking to climb above 0.6750 as Fed to remain neutral on interest rates.
- The USD Index failed to get sustained positive momentum despite a solid US labor market.
- Robust earnings could propel US inflation as households would be equipped with higher funds for disposal.
The AUD/USD pair is making efforts to shift its auction above the immediate resistance of 0.6750 in the early Asia session. The Aussie asset is expected to attract significant bids as the Federal Reserve (Fed) is expected to pause paddling the interest rates cycle despite tight United States labor market conditions.
S&P500 was heavily bought on Friday as investors focused on optimism derived from neutral guidance from the Fed and ignored US banking jitters, portraying a cheerful market mood. The US Dollar Index (DXY) looks vulnerable above the immediate support of 101.20. The USD Index failed to get sustained positive momentum despite the serious addition of fresh payrolls in the US labor market.
Meanwhile, the US Treasury yields showed some recovery as investors thought solid US Employment data could force Fed policymakers to reconsider their pausing approach. And, solid US Nonfarm Payrolls (NFP) could provide a base for the data-dependent approach to be followed by the Fed.
As per the US Employment report, the US economy added 253K fresh jobs in April, higher than the consensus of 179K and the former release of 165K. The Unemployment Rate softened to 3.4% vs. the expectations and the prior release of 3.5%. Apart from that, monthly Average Hourly Earnings accelerated at a pace of 0.5% while the street was anticipating a pace of 0.3%. Robust earnings could propel US inflationary pressures as households would be equipped with higher funds for disposal.
On the Australian Dollar front, investors will focus on the quarterly Retail Sales data. First-quarter Retail Sales are expected to contract by 0.4% vs. the former contraction of 0.2%. This might allow the Reserve Bank of Australia (RBA) to keep interest rates steady as declining retail demand is not supportive of policy tightening.
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