The AUD/USD pair surged to around 0.6560 in Monday’s European session, supported by broad weakness in the US Dollar (USD). The Greenback continues to lose ground as markets increasingly expect the Federal Reserve (Fed) to cut interest rates at its upcoming policy meeting this month.
At the time of writing, the US Dollar Index (DXY) slipped toward 97.55, marking its lowest level in a month. Renewed concerns over the US labor market, especially following fresh tariffs introduced by President Donald Trump, have strengthened market bets on a Fed rate cut.
Adding to the bearish tone, several Federal Open Market Committee (FOMC) members, including Chair Jerome Powell, have recently struck a dovish note, highlighting worries about weakening job demand.
This week, traders will closely monitor US employment indicators for further direction, with JOLTS Job Openings (July), ADP Employment Change, and Nonfarm Payrolls (August) expected to provide crucial insights into the labor market’s health.
On the other side, the Australian Dollar (AUD) is finding additional support from encouraging domestic data. China’s Caixin Manufacturing Purchasing Managers’ Index (PMI) returned to expansion in August, posting 50.5 compared to July’s 49.5 and beating expectations. A reading above 50.0 signals growth in manufacturing activity, offering fresh optimism for Australia’s export-driven economy.
For fresh cues on the current status of the US labor market, investors will focus on a number of employment-related data this week, such as JOLTS Job Openings for July, and ADP Employment Change and Nonfarm Payrolls (NFP) data for August.
Meanwhile, the Australian Dollar (AUD) trades higher as Caixin Manufacturing Purchasing Managers’ Index (PMI) has returned to expansion in August, released earlier in the data. The PMI data came in at 50.5, higher than expectations and the prior reading of 49.5. A figure below the 50.0 threshold is considered as contraction in the business activity.
