The AUD/USD pair moved up in the European session on Friday (7/2) but continues to face pressure near 0.6300. The Australian currency pair moved sideways as investors await the US Nonfarm Payrolls (NFP) data for January, due to be published at 13:30 GMT.

Market participants will be closely focused on the employment data, which will provide clues on how long the Federal Reserve (Fed) will keep interest rates steady between 4.25% and 4.50%.

The US economy added 170,000 jobs last month, down from 256,000 in December, according to estimates. The Unemployment Rate is expected to remain steady at 4.1%. Signs of a strong jobs market will boost market expectations that the Fed will keep interest rates steady for longer. Conversely, a weak figure will force traders to increase their dovish bets.

Ahead of the US NFP data, the US Dollar Index (DXY), which tracks the greenback against a basket of six major currencies, is trading in a tight range below 108.00.

Meanwhile, the Australian Dollar (AUD) has been performing strongly in recent trading sessions amid expectations that US President Donald Trump and Chinese Leader XI Jinping will meet to reach a deal and lift tariffs. This week, China retaliated against Donald Trump's 10% tariffs by imposing 15% levies on coal and Liquefied Natural Gas (LNG), and 10% on crude oil, farm equipment and some cars.

Such a scenario would be favorable for the Australian dollar as Australia is China's main trading partner.

On the monetary policy front, traders have fully priced in a 25 basis points (bps) interest rate cut by the Reserve Bank of Australia (RBA) at its policy meeting on February 18.(Newsmaker23)

Source: FXstreet