The AUD/USD pair strengthened around 0.6400 as the US Dollar (USD) weakened during the Asian session on Monday. There are no Federal Reserve (Fed) speakers this week as the media is closed. All eyes will be on the Reserve Bank of Australia (RBA) rate decision on Tuesday, with no rate changes expected.

Data released by the US Bureau of Labor Statistics (BLS) on Friday showed that US Nonfarm Payrolls (NFP) increased by 227,000 in November, compared to an upwardly revised 36,000 in October. This reading was better than the estimate of 200,000. Meanwhile, the Unemployment Rate rose to 4.2% in November from the previous reading of 4.1%.

Several Fed officials have spoken over the past few weeks, and there is almost unanimous consensus that the labor market is cooling but healthy. The greenback weakened in an immediate reaction to the Nonfarm Payrolls data. Financial markets are now pricing in a near 70% chance of a 25 basis point (bps) interest rate cut by the Federal Reserve (Fed) at its upcoming meeting on December 17-18, according to the CME FedWatch tool

On the Aussie side, the Australian central bank is widely expected to keep its benchmark interest rate unchanged at 4.35%. RBA Governor Bullock said earlier this month that "underlying inflation remains too high to warrant a reduction in the cash rate target in the near term." However, Australia's Q3 GDP growth report was weak and suggested a dovish surprise cannot be ruled out.

The market has brought forward the timing of the first rate cut to April from May previously. Market participants will be keeping an eye on the RBA Press Conference. Dovish comments from policymakers could put selling pressure on the Aussie against the USD.

Source: FXStreet