AUD/USD reclaims 0.6600 resistance as USD Index turns subdued, FOMC minutes eyed

• AUD/USD has managed to climb back above 0.6600 amid subdued performance by the USD index.
• Speaker McCarthy made clear that we are nowhere near cracking bipartisan with the White House as their partisan terms are ‘unacceptable’.
• The Australian economy has started slowing down as labor market conditions are facing the heat of higher interest rates.

The AUD/USD pair has returned above the 0.6600 resistance after a downside move in the Asian session. The Aussie asset is looking to extend its recovery further as the US Dollar Index (DXY) has displayed a subdued performance.

S&P500 futures are holding nominal gains posted in early Asia, however, the overall market mood is still risk-averse amid the lack of development over US debt-ceiling issues. US House of Representatives Kevin McCarthy made clear on Tuesday that we are nowhere near cracking bipartisan with the White House as their partisan terms are ‘unacceptable’.

Republicans are demanding a sheer 8% cut in the budget’s big spending wrath. They are worried that further budget deficit could put long-term liabilities on the upcoming generation. So it would be better if Democrats return to the CY2022 budget style. Also, Republicans have criticized extra tax on the Wealthy community.

The US Dollar Index (DXY) has posted minor losses in Tokyo as investors have been sidelined ahead of the release of the Federal Open Market Committee (FOMC) minutes for the May meeting. The FOMC minutes are expected to provide cues about further monetary policy action by the Federal Reserve (Fed). Fed chair Jerome Powell in a meeting on Friday favored a pause in the rate-hiking spell as tight credit conditions by US regional banks have squeezed the flow of credit into the economy.

Meanwhile, the Australian Dollar is likely to remain under pressure as the street is anticipating a pause in the policy-tightening regime by the Reserve Bank of Australia (RBA). The Australian economy has started slowing down as labor market conditions and economic activities are facing the heat of higher interest rates.