AUD/USD extends its upside above 0.6600, eyes on RBA rate decision

• AUD/USD holds positive ground near 0.6610 in Monday’s early Asian session.
• The US Nonfarm Payrolls (NFP) came in weaker than expected in April, along with lower-than-expected wage growth.
• The RBA is expected to hold the cash rate at 4.35% for a fourth straight meeting on Tuesday while reinstating a hawkish bias.

The AUD/USD pair extends its upside around 0.6610 during the early Asian session on Monday. The downbeat US employment data for April has exerted some selling pressure on the US Dollar (USD) across the board. Investors will closely monitor the Reserve Bank of Australia (RBA) interest rate decision on Tuesday.

The employment market in the United States slowed more than expected in April and the annual wages fell below 4.0% for the first time in nearly three years, the US Bureau of Labor Statistics (BLS) reported on Friday. The US Nonfarm Payrolls (NFP) rose 175,000 in April from the 315,000 increase (revised from 303,000) in March, below the market estimation of 243,000. The Unemployment Rate climbed to 3.9% in April from 3.8%, while the Average Hourly Earnings dropped to 3.9% YoY in April from the previous reading of 4.1%.

Investors increased their bets that the Federal Reserve (Fed) will start counting the interest rate in September and expect the Fed to lower its borrowing costs twice this year instead of only once before the data was released. This, in turn, weighs on the Greenback and acts as a tailwind for the AUD/USD pair.

On the Aussie front, the RBA is likely to keep its key interest rate at a 12-year high of 4.35% on Tuesday as inflation in Australia remains stubbornly high. Market players will take more cues from the RBA press conference after the monetary policy meeting. If the RBA’s Governor Michele Bullock delivers a hawkish remark, this might boost the Australian Dollar (AUD) against the USD. Analysts from Commonwealth Bank and Westpac anticipate the interest rate to peak at 4.35% in November 2023, then drop to 3.10% by December 2025.