AUD/USD sticks to modest gains above 0.6500 ahead of US macro data, Fed’s Powell

• AUD/USD gains some positive traction and builds on the overnight recovery from a multi-week low.
• Optimistic remarks by China’s NDRC and PBoC Governor boost the Aussie amid a softer Greenback.
• Traders now look to the US macro data for some impetus ahead of Fed Chair Powell’s testimony.

The AUD/USD pair attracts some buying following an intraday dip to sub-0.6500 levels on Wednesday and moves further away from a three-week low touched the previous day. The momentum lifts spot prices to the 0.6525 region during the early part of the European session, though lacks follow-through or bullish conviction.

The Australian Dollar (AUD) gets a minor lift in reaction to optimistic remarks by China’s National Development and Reform Commission (NDRC), saying that the country’s 2024 growth target is in line with the economic potential. The NDRC added that the economy is likely to see a good start in Q1 and that the recovery will be consolidated and strengthened. Adding to this, the People’s Bank of China (PBoC) Governor Pan Gongsheng noted that the central bank still has sufficient room for monetary policy and there is room for cutting RRR. This, to a larger extent, overshadows unimpressive domestic data, showing that Australia's economy eked out a modest 0.2% growth in the December quarter.

Apart from this, a modest US Dollar (USD) weakness turns out to be a key factor pushing the AUD/USD pair higher. The markets have been pricing in a greater chance, around 70% for the first interest rate cut by the Federal Reserve (Fed) in June. Moreover, the US ISM PMI showed on Tuesday that growth in the services sector slowed in February, which further keeps the USD bulls on the defensive and remains supportive of the AUD/USD pair's intraday uptick. Traders, however, might refrain from placing fresh USD bearish bets ahead of Fed Chair Jerome Powell's congressional testimony, which will be scrutinized closely for fresh cues about the rate-cut path and provide some meaningful impetus.

Market participants on Wednesday will also confront the release of the US ADP report on private-sector employment and JOLTS Job Openings data, due later during the early North American session. This, along with the broader risk sentiment, will drive the USD and produce short-term opportunities around the AUD/USD pair ahead of Chinese trade balance data on Thursday. The attention will then turn to the closely watched US monthly employment details, popularly known as the Nonfarm Payrolls (NFP) report on Friday. Nevertheless, spot prices, for now, seem to snapped a two-day losing streak and remain at the mercy of the USD price dynamics.