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Positive Market Sentiment Propels AUD/USD to 0.6600, and Fed Powell's Testimony Is Anticipated
The AUD/USD pair surges to 0.6600 on the improvement in demand for risk-sensitive assets. The US Dollar will be influenced by the testimony of Fed Chair Powell and US NFP data. The market becomes more anticipatory of June rate decreases by the Fed.
The AUD/USD pair surges to round-level resistance at 0.6600 on Thursday morning in New York. The Australian asset is experiencing substantial purchasing activity due to market participants' increased risk tolerance in anticipation that the Federal Reserve (Fed) will commence interest rate reductions beginning with the June policy meeting.
On the basis of optimistic overnight futures, it is anticipated that the S&P 500 will open on a favorable note, reflecting an ebullient market sentiment. The yield on a 10-year US Treasury has decreased to 4.07%. As market anticipation for a June rate cut by the Federal Reserve has increased, yields on interest-bearing government bonds have decreased. The US Dollar Index (DXY) falls to 103.20 as uncertainty surrounding the trajectory of U.S. growth momentum intensifies.
Wednesday's publication of employment data in the United States suggested that conditions on the labor market are improving. In February, the ADP Research Institute reported that private employer employment decreased to $140,000 from the anticipated $150,000. Employment postings in the United States decreased marginally in January to 8.863 million from 8.9 million in December.
Investors will gain additional understanding of the labor market moving forward following the publication of February US Nonfarm Payrolls (NFP) data on Friday.
In the interim, investors are awaiting the testimony of Federal Reserve (Fed) Chair Jerome Powell before Congress at 15:00 GMT. Investors are curious as to when the Federal Reserve will initiate interest rate reductions.
Speculators in the Asia-Pacific region are awaiting the release of China's February inflation data on Saturday. It is anticipated that the monthly Consumer Price Index (CPI) data will reflect an increase of 0.4%. The annual CPI is anticipated to have increased at a faster rate of 0.5% compared to January's 0.3% increase. Enhanced price pressures would signify a corresponding rise in consumer expenditure.
Notably, Australia is China's preeminent trading partner; therefore, an improvement in China's economic outlook would be advantageous for the Australian Dollar.
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