AUD/USD exhibits pre-Fed nervousness near 0.64 prior to the US ADP Employment Change

AUD/USD fluctuates around 0.6400 as traders get cautious ahead of Wednesday's crucial Federal Open Market Committee (FOMC) meeting. In the midst of a lackluster Asian session, traders of the Australian dollar-United States dollar pair are challenged by both pre-Fed worry and China and U.S.-related concerns.

However, recent solid US data bolstered expectations for a hawkish Fed action and contradicted the market's earlier belief that policymakers will imply fewer rate hikes beginning in December. However, growing fears of recession and rising price pressure appear to pose a challenge to both Fed hawks and AUD/USD bearish.

In spite of this, the US JOLTS Job Openings rose to 10,717M in September, compared to the 10.0M projection and the upwardly revised 10.28M previous readings. In addition, the US ISM Manufacturing PMI increased to 50.2 in October, compared to 50.0 market expectations and 50.9 previously. Final readings of the US S&P Global Manufacturing PMI for October surpassed 49.9 early estimates to reach 50.4, but remained below the previous month's readings of 52.0.

Alternatively, the Reserve Bank of Australia's (RBA) willingness to offer additional rate hikes, despite announcing the second increase of 25 basis points (bps) to the benchmark rate the day before, favors AUD/USD purchasers. Reserve Bank of Australia (RBA) Governor Philip Lowe stated at his scheduled appearance on Tuesday, "Rates have been increased significantly in a very short period of time." The official noted that the board has determined that a more gradual rate increase is warranted.

Elsewhere, expectations of loosening covid restrictions in China and the recently stronger China Caixin Manufacturing PMI for October, albeit being the third consecutive reading below 50, may have aided AUD/USD purchasers in the past.

Following a positive start to November, yields stay stagnant at 4.05%, while S&P 500 Futures post modest gains despite Wall Street's negative close.

That said, the AUD/USD pair traders should watch the risk catalysts and Australia’s Building Permits for September for fresh impulse among the sluggish markets. Also crucial will be the October month US ADP Employment Change, as it provides an early indicator to Friday’s US Nonfarm Payrolls. However, substantial emphasis should be directed to how well the Fed policymakers could transmit a brake to the fast rate hikes.

Tuesday's daily candle joins the AUD/USD pair's reluctance to drop below the 10-DMA support near.6390, giving buyers reason for optimism. However, a downward-sloping resistance line from early August, which was near 0.6480 at the time of publication, challenges the upward momentum of the quote.