The AUD/USD pair dropped to nearly 0.6660 as investors awaited the US NFP report for May. The Fed is anticipated to start lowering interest rates in September, while the RBA is expected to keep rates steady by the end of the year.
In Friday’s London session, the Aussie asset struggled to break the resistance level of 0.6700 amidst uncertainty before the US Nonfarm Payrolls (NFP) report release. Market sentiment turned cautious as the report could impact expectations for Fed rate cuts, with S&P 500 futures declining and the US Dollar Index hovering near 104.00 support.
Analysts predict the US Employment report to show an increase of 185K payrolls, with the Unemployment Rate remaining at 3.9%. Investors are also watching for Average Hourly Earnings data, with annual growth forecasted at 3.9% and monthly growth expected to rise by 0.3%.
Positive payrolls and wage growth data could deter the Fed from lowering interest rates, with expectations leaning towards a rate cut in September. On the other hand, the Australian Dollar remains steady as the RBA is unlikely to implement rate cuts this year. RBA Governor Michele Bullock’s recent comments hinted at a potential interest rate increase if inflation does not reach the target range of 1%-3%. Additionally, the RBNZ is also expected to reconsider its interest rate stance next year.