AUD/USD refreshes day low below 0.6600 despite mixed views for Fed policy, RBA policy eyed

• AUD/USD has printed a fresh day’s low at 0.6587 as USD Index prepares for a fresh upside.
• The street is holding mixed views on the interest rate decision by the Fed for June’s monetary policy meeting.
• The RBA is expected to raise the OCR further as Australian inflation has turned stubborn again.

The AUD/USD has refreshed its day’s low at 0.6587 in the London session. The Aussie asset has witnessed immense selling pressure despite the street holding mixed views on the interest rate decision by the Federal Reserve (Fed) for June’s monetary policy meeting.

S&P500 futures are holding nominal gains in the European session, indicating that the risk appetite theme is being underpinned by the market participants. The overall upbeat market mood seems biased toward the US equities and not supporting the risk-sensitive currencies. The US Dollar Index (DXY) has turned sideways after printing a fresh day’s high at 104.32. The USD Index is expected to extend its upside journey amid the absence of signals of exhaustion in the upside momentum.

Meanwhile, the street is divided about Fed’s interest rate policy stance. A scrutiny of the Friday’s Nonfarm Payrolls (NFP) report showed that the Unemployment Rate jumped to its seven-month high at 3.7%. Contrary to that, additions of fresh payrolls in the United States labor market in May were at 339K, significantly higher than the estimates of 190K. The situation is a little surprising on whether to consider consistent solid payroll additions and support more rate hikes or pause the same due to a sudden rise in the jobless rate.

On the Australian Dollar front, the interest rate decision by the Reserve Bank of Australia (RBA) will remain in focus. Considering the fact that Australian inflation has turned stubborn again as the monthly Consumer Price Index (CPI) indicator rose to 6.8% in April from March’s 6.3% figure, one more interest rate hike of 25 basis points (bps) which will push the Official Cash Rate (OCR) to 4.10%, cannot be ruled out.