AUD/USD consolidates below 0.6500 ahead of US NFP and RBA interest rate policy

• AUD/USD trades back and forth below 0.6500 ahead of the US labor market data.
• US ADP Employment report released on Wednesday indicated that labor demand remained soft in August.
• The RBA is expected to keep interest rates unchanged at 4.10% on Tuesday.

The AUD/USD strives for a decisive move as investors as investors sidelined ahead of the United States Nonfarm Payrolls (NFP) data, which will be published at 12:30 GMT. The Aussie asset continued to oscillate below the psychological resistance of 0.6500, however, a power-pack action after the US labor market data cannot be ruled out.

S&P500 futures post some decent gains in Europe, portraying an upbeat market mood ahead of the US NFP report. US ADP Employment report released on Wednesday indicated that labor demand remained soft in August due to a hiring slowdown in the leisure and hospitality sector. Also, wage growth was slow as firms heavily worked on retaining the current laborforce.

The US Dollar Index (DXY) clings to gains of around 103.60 as investors need a clear picture of the current status of the labor market. The US NFP is expected to set an undertone for the Federal Reserve’s (Fed) September monetary policy. As per the CME Fedwatch tool, the Fed is expected to keep interest rates unchanged at 5.25-5.50% but Fed Powell could reiterate a hawkish commentary on the interest rate outlook.

Meanwhile, the Australian Dollar fails to capitalize on the surprisingly upbeat Caixin Manufacturing PMI for August. The economic data landed above the 50 threshold that separates contraction at 51.0 vs. the estimates of 49.3 and the former release of 49.2. The Australian Dollar didn’t strengthen despite being a proxy for Chinese economic prospects.

Going forward, the focus will be on the interest rate decision by the Reserve Bank of Australia (RBA), which will be announced on Tuesday. According to a Reuters poll, RBA Governor Philip Lowe will keep interest rates unchanged at 4.10% but will keep doors open for more hikes.