AUD/USD refreshes four-month low at 0.6560 as investors turn anxious for US NFP release

• AUD/USD has refreshed its four-month low at 0.6563 as anxiety among investors has soared ahead of US NFP.
• The Australian Dollar is struggling to firm its feet as optimism linked with China’s economic recovery is fading.
• US Unemployment Rate is expected to remain steady at rock-bottom levels.

The AUD/USD pair has printed a fresh four-month low at 0.6563 in the Asian session. The Aussie asset is facing immense pressure as the US Dollar Index (DXY) has shown a recovery move after a correction to near 105.13.

Although the recovery move from the USD Index is not strong enough, the Australian Dollar is struggling to firm its feet as optimism linked with China’s economic recovery is fading and the Reserve Bank of Australia (RBA) is considering the current monetary policy is restrictive enough to bring down the sticky inflation.

The USD Index is struggling to extend its recovery above 105.35. S&P500 futures have extended losses firmly as the higher tax burden endorsed by US President Joe Biden to support the blue-collar section has discouraged investors. US Biden proposed an increase in corporation tax from 21% to 28%. Also, rich investors are liable to pay hefty taxes now. A sheer sell-off in the 500-US stocks basket is portraying a dismal market mood.

Meanwhile, the demand for US government bonds is accelerating as investors are skeptical about the United States labor market after a surprise jump in the Initial Jobless Claims released on Thursday. A jump in jobless claims by 11%, the highest in the past five months indicates that the US labor market is getting complicated now. Also, a four-fold planned lay-off reported by Reuters indicates that the strength in the labor market is fizzing out.

For transparency on the status of the US labor market, US Nonfarm Payrolls (NFP) data will be keenly watched. According to the estimates, the world’s largest economy has added fresh 203K payrolls in February, lower than the bumper release of 517K recorded for January. The Unemployment Rate is expected to remain steady at 3.4%.