The Australian Dollar strengthens against the USD as softer US economic data reduces bets on further Federal Reserve tightening.
The AUD/USD pair climbed to near 0.7090 in early Asian trading on Monday, extending gains as the US Dollar weakened. Markets are scaling back expectations for additional Federal Reserve rate hikes following recent signs of cooling US economic activity.
The pair had struggled to hold above 0.7050 last week amid mixed signals from Fed officials. However, softer-than-expected US jobs and inflation data released late last week shifted sentiment, reducing the likelihood of another Fed rate increase in the near term.
Traders are now pricing in a higher probability of a pause in the Fed’s tightening cycle, supporting risk-sensitive currencies like the Australian Dollar.