Ella 
During early Asian trading on Monday, AUD/USD fell below the 0.6600 mark. Strong U.S. nonfarm payrolls data boosted U.S. Treasury yields and the dollar. AUD/USD is currently trading around 0.6572, down 0.09% on the day.
Data released by the U.S. Bureau of Labor Statistics (BLS) on Friday showed that U.S. nonfarm payroll employment (NFP) rose to 199,000 in November after recording 150,000 in October, higher than the 180,000 expected. Meanwhile, the unemployment rate fell to 3.7% from 3.9% during the same period. Average hourly earnings held steady at 4.0%, in line with market expectations. Finally, the preliminary reading of the University of Michigan Consumer Survey in December was 69.4, higher than the previous reading of 61.3, recording the second highest level so far this year.
Futures markets are pricing in the Fed ending its rate hike cycle next year and beginning to cut rates. However, markets lowered expectations for a first rate cut following the release of U.S. employment data from March to May. The Federal Reserve will hold a two-day policy meeting starting on Tuesday. Investors will get a sense of what officials think about the economy.
In terms of the Australian dollar, the Australian Bureau of Statistics announced last week that the country’s trade balance narrowed to A$7.129 billion in October from the previous value of A$6.184 billion, which was lower than the expected value of A$7.5 billion. However, market concerns about deflation in China and weaker-than-expected consumer price index (CPI) and producer price index have put some selling pressure on the Australian dollar (AUD), the currency that represents China.
Market participants will be paying close attention to Reserve Bank of Australia Governor Bullock’s speech on Tuesday as well as U.S. inflation data due on Tuesday. Focus will turn to the two-day Federal Reserve policy meeting on Tuesday and Wednesday. The event could spark market volatility and provide direction for the AUD/USD pair.
