The Australian Dollar (AUD) remains under pressure against the US Dollar (USD) on Friday, giving back most of its earlier gains despite broad weakness in the Greenback following a disappointing Nonfarm Payrolls (NFP) data. The AUD/USD initially surged nearly 70 pips after US jobs data surprised to the downside, but the momentum quickly faded as markets shifted focus to rising expectations of an interest rate cut by the Reserve Bank of Australia (RBA) at its upcoming meeting on August 12. The dovish outlook is keeping the Aussie pinned near multi-week lows.

At the time of writing, the AUD/USD pair is edging lower, hovering around 0.6446 during the American trading hours, though still modestly up 0.30% on the day. The pair remains on track to record its biggest weekly decline since March. Meanwhile, the US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, has pulled back from the two-month high of 100.26 marked earlier on Friday and is currently trading near 99.13, as expectations for a September interest rate cut rise following weaker US labor market data.

The July NFP report showed the US economy added just 73,000 jobs, falling well short of the 110,000 expected, marking the weakest print of the year. To add to the disappointment, prior months were revised sharply lower, with May and June payrolls slashed by a combined 258,000 jobs. The Unemployment Rate edged up to 4.2%, in line with expectations, while wage growth remained steady at 0.3% MoM and 3.9% YoY. The data signaled a cooling labor market and prompted a swift repricing of interest rate expectations. According to the CME FedWatch Tool, markets are now assigning an 82% probability of a rate cut at the Federal Reserve's September policy meeting, up sharply from 37% before the report was released.

Source: Fxstreet