Australian Dollar gains against US Dollar ahead of US NFP data

The Australian Dollar (AUD) trades 0.4% higher against the US Dollar (USD) at around 0.7240 during the European trading session on Friday. The Aussie pair reflects strength as the US Dollar underperforms ahead of the United States (US) Nonfarm Payrolls (NFP) data for April, which will be published at 12:30 GMT.

During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, is down 0.35% to near 97.90.

Investors will pay close attention to the US NFP data to get fresh cues on the Federal Reserve’s (Fed) monetary policy outlook. According to the CME FedWatch tool, there is a 72% chance that the Fed will hold interest rates at their current levels by the year-end.

The US NFP report is expected to show that employers hired 62K fresh workers, significantly lower than 178K in March. The Unemployment Rate is seen as steady at 4.3%. Average Hourly Earnings, a key measure of wage growth, is estimated to have grown at a stronger pace of 3.8% Year-on-Year (YoY) against the previous reading of 3.5%.

Signs of strong job growth would weigh on bets supporting interest rate cuts by the Fed in the near term. On the contrary, soft numbers would boost them.

On the geopolitical front, the continuation of the ceasefire between the US and Iran is keeping the broader risk rally intact. S&P 500 futures are up 0.45% to near 7,370 in the European trade, indicating strong appetite for riskier assets.