AUD/USD hits three-month high, fueled by risk-on mood

• AUD/USD rallies near 0.6600, continuing its upward trajectory on the back of a buoyant market mood.
• Mixed US economic reports fuel speculation of a potential Fed policy shift despite recent hawkish remarks.
• Upcoming economic, including RBA speeches and key US data, are set to offer fresh impetus to AUD/USD traders.

The AUD/USD bounces from a daily low of 0.6549 and climbs for the second straight day, printing a new three-month high at 0.6591 at the time of writing. An upbeat market sentiment and overall US Dollar weakness maintain the pair hovering below the 0.6600 figure.

Australian Dollar gains against US Dollar, nearing the 0.6600 mark amid mixed US economic data and market optimism

US economic data on Friday suggests that business activity, although expanded In the services and composite sectors, the manufacturing segment shrank in November after gathering pace and rising in October. S&P Global Services PMI rose by 50.8 while the Composite grew by 50.7, with both figures exceeding forecasts. On the other hand, S&P Global Manufacturing PMI stood at 49.4, below estimates and the prior reading.

Today’s economic data and those previously revealed during the week kept speculations that the US Federal Reserve (Fed) would ease monetary policy next year. Despite Fed officials’ comments last week, they suggested that further tightening is needed and would depend on data to take the appropriate measures to curb inflation.

The US 10-year benchmark note climbs six basis points (bps) and is up at 4.472%, though it failed to support the Greenback. Contrarily, the US Dollar Index (DXY) is falling 0.38%, at 103.36.

On the Australian front, news that China continues stimulating the property market has improved investors' mood, as shown by Asian, European, and North American equity markets. That is alongside hawkish comments by the Reserve Bank of Australia (RBA) Governor Michele Bullock, who said “A more substantial monetary policy tightening is the right response to inflation that results from aggregate demand exceeding the economy’s potential to meet that demand.”

Next week, the Australian economic calendar will feature RBA Bullock's speech, retail sales, and the release of inflation figures. On the US front, housing data, consumer confidence, GDP, Fed’s preferred inflation gauge, and ISM Manufacturing PMI.

 AUD/USD Technical Levels