AUD/USD extends its upside below the mid-0.6400s ahead of the US NFP data

• AUD/USD edges higher to 0.6435 on the softer USD, risk appetite.
• Reserve Bank of Australia (RBA) is likely to raise the rate by 25 basis points (bps) next week.
• Market participants will closely focus on US employment data, including Nonfarm Payrolls.

The AUD/USD pair extends its upside during the early European trading hours on Friday. The US dollar and the risk appetite lend support to the pair ahead of the US Nonfarm Payrolls data on Friday. As of press time, the pair is trading around 0.6435, gaining 0.03% on the day.

The markets anticipate the Reserve Bank of Australia (RBA) to raise the cash rate by 25 basis points (bps) next week while holding the hawkish stance. Early Friday, the Australian Retail Sales for the third quarter (Q3) improved by 0.2% QoQ versus from 0.6% drop in the previous reading. Meanwhile, Judo Bank Composite PMI came in at 47.6 in October from the previous reading of 47.3. The Services PMI grew to 47.9 in October from 47.6 in September. The upbeat Australian economic data and risk-on environment boost to Australian Dollar (AUD) against the Greenback.

On the other hand, markets are confident that the Federal Reserve (Fed) is approaching the end of its tightening cycle after Fed Chair Jerome Powell made it clear that financial conditions will need to remain tight to avoid further rate rises. The dovish message following the Federal Open Market Committee (FOMC) policy meeting exerts some pressure on the USD. However, the upward trajectory of US Treasury bond yields will likely continue to dominate the USD performance in the next sessions.

Trader will closely watch the highly-anticipated US Nonfarm Payrolls for fresh impetus. The US economy is expected to add 180K jobs in October. The US Unemployment Rate is estimated to remain steady at 3.8%. The stronger-than-expected data might limit the downside of the USD and act as a headwind for the AUD/USD pair. Traders will take cues from the data and find a trading opportunity around the AUD/USD pair.