AUD/USD climbs above 0.6650 despite RBA to reinforce dovish policy ahead

• AUD/USD has sensed selling pressure around 0.6650 as investors are anticipating a neutral policy stance by the RBA.
• The appeal for US equities seems solid amid optimism over approval of the US debt-ceiling raise.
• Other US leaders have shown frustration for US Biden on his willingness to involve in a bipartisan deal to increase the US borrowing cap limit.

The AUD/USD pair has extended its reocvery above 0.6650 in the early Asian session. The Aussie asset has managed in extending its recovery further as the US Dollar Index (DXY) has witnessed an exhaustion in the upside momentum.

S&P500 continued its bullish performance, settled with significant gains on Thursday consecutively. The appeal for US equities seems solid amid optimism over approval of the US debt-ceiling raise by the White House and Republican leaders.

Meanwhile, other US congressional leaders have shown frustration for US President Joe Biden on his willingness to involve in a bipartisan deal to increase the US borrowing cap limit as lower spending initiatives in the budget would create tougher work requirements for food aid recipients, as reported by Reuters.

The demand for US government bonds has dropped dramatically as investors are anticipating that US debt-ceiling negotiations will get thumbs up from Republicans. The 10-year US Treasury yields have jumped strongly above 3.65%.

On the Australian Dollar front, weak Employment data released on Thursday is expected to reinforce the Reserve Bank of Australia (RBA) to return to a steady monetary policy stance. In April, the Australian labor market witnessed a decline in laborforce numbers by 4.3K. April’s Unemployment Rate has jumped to 3.8%.

Therefore, RBA Governor Philip Lowe might keep interest rates steady at 3.85% in its June monetary policy meeting as higher interest rates have started biting firms’ production levels due to the bleak economic outlook.