AUD/USD dwindles to a fresh weekly low (0.6389) after struggling to retrace the decline following the RBA meeting, and the exchange rate might not defend the September low (0.6363) as the US Non-Farm Payrolls (NFP) report is anticipated to show a further improvement in the labor market.
AUD/USD seems to be running a race as the weakest across commodity bloc currencies as it depreciates for the third consecutive day. The exchange rate may depreciate throughout the week as the NFP report is anticipated to show the US economy adding 250K jobs in September.
A resilient labor market evidenced by the reports may generate a bullish reaction in the USD as the Federal Reserve pursue a restrictive policy, while the central bank may continue its inflation combating approach as the Summary of Economic Projections (SEP) reflect a steeper path for US interest rates.
Hence, the speculation for another 75bp Fed rate hike may drag on AUD/USD as the RBA softens its approach in normalizing monetary policy, and the market is yet to see whether Governor Philip Lowe and Co. will adjust the forward guidance over the coming months as the central bank acknowledges that “the cash rate has been increased substantially in a short period of time.”
AUD/USD track headwinds ahead of the next RBA meeting on November 1 as the central bank seems to be nearing the end of its hiking cycle, but a further decline in the exchange rate may fuel the tilt in retail sentiment like the behavior seen earlier this year.