AUD/USD soars to 0.6600 on cheerful market mood, Fed Powell’s testimony eyed

• AUD/USD jumps to 0.6600 as the appeal for risk-sensitive assets improves.
• The US Dollar will be guided by Fed Powell’s testimony and US NFP data.
• Market expectations for Fed rate cuts in June escalate.

The AUD/USD pair rallies to the round-level resistance of 0.6600 in the early New York session on Thursday. The Aussie asset witnesses significant buying interest as the risk appetite of the market participants has increased on expectations that the Federal Reserve (Fed) will start reducing interest rates from the June policy meeting.

Considering positive overnight futures, the S&P 500 is expected to open on a bullish note, indicating an upbeat market mood. 10-year US Treasury yields have dropped to 4.07%. Increasing market expectations for a Fed rate cut in June have reduced yields on interest-bearing government bonds. The US Dollar Index (DXY) slumps to 103.20 as uncertainty deepens over United States growth momentum outlook.

The US Employment data, released on Wednesday, indicated that labor market conditions are easing. The ADP Research Institute reported that hiring by private employers was lower at 140K against expectations of 150K in February. In January, jobs posted by US employers were slightly lower at 8.863 million vs. 8.9 million in December.

Going forward, investors will get more insights into the labor market after the release of the US Nonfarm Payrolls (NFP) data for February, which will be published on Friday.

Meanwhile, investors await Federal Reserve (Fed) Chair Jerome Powell's testimony before Congress at 15:00 GMT. Investors would like to know when the Fed will start reducing interest rates.

In the Asia-Pacific region, investors await China’s inflation data for February, which will be published on Saturday. The monthly Consumer Price Index (CPI) data is forecasted to have risen by 0.4%. The annual CPI data is expected to have increased at a higher pace of 0.5% against 0.3% in January. Higher price pressures would indicate an increase in consumer spending.

It is worth noting that Australia is the leading trading partner of China, and improving China’s economic prospects strengthen the Australian Dollar.