AUD/USD consolidates its losses around 0.6360 ahead of RBA rate decision

• AUD/USD remains flat around 0.6362 as traders turn cautious ahead of Australia’s key event.
• US ISM Manufacturing PMI came in at 49.0 in September vs. 47.6 prior, better than expected.
• Market players expect another interest rate pause at 4.1% from the Reserve Bank of Australia (RBA) on Tuesday.

The AUD/USD pair consolidates its recent losses above the mid-0.6300s during the early Asian session on Tuesday. Traders prefer to wait on the sidelines ahead of the Reserve Bank of Australia (RBA) monetary policy meeting on Tuesday. RBA is likely to maintain a status quo on interest rates at its upcoming meeting. The pair currently trades near 0.6362, losing 0.02% for the day.

Data released on Monday revealed that the US ISM Manufacturing PMI came in at 49.0 in September from 47.6 in the previous reading, above the market consensus of 47.7. This figure showed that business activity in the US manufacturing sector continued to contract.

Further details of the report showed that the Prices Paid Index fell significantly from 48.4 to 43.8. The Employment Index rose from 48.4 to 51.2. Finally, the New Orders Index climbed from 46.8 to 49.2.

Federal Reserve (Fed) Governor Michelle Bowman said on Monday that it will likely be appropriate to raise the policy rate further and hold it at restrictive levels for some time. While Fed Vice Chair for Supervision Michael Barr stated that the central bank should approach monetary policy with caution. He said the most important question is not how much interest rates will rise, but how long they will remain at a sufficiently restrictive level. However, Barr believes that the Fed can control inflation without causing a significant deterioration in the jobs market.

On the Aussue front, market players expect another interest rate pause at 4.1% from the Reserve Bank of Australia (RBA) on Tuesday. This will be the first meeting with Michele Bullock as governor. Market players will take cues from the RBA statement. Any hints about a further rate hike might cap the downside of the Aussie against the US Dollar.

Looking ahead, traders will closely watch the RBA interest rate decision on Tuesday. Also, the US JOLTS Job Openings report will be due in the American session. The focus will shift to the US employment data, with the release of the ADP report on Wednesday and the Nonfarm Payrolls on Friday.