AUD/USD gains traction above 0.6400 ahead of Australian trade data

• AUD/USD climbs above 0.6400 after the Federal Open Market Committee (FOMC) policy meeting.
• FOMC decided to hold the rate steady, as widely expected; ADP Private Payrolls rose 113K in October vs. 89K prior, below consensus.
• International Monetary Fund (IMF) highlighted that further policy tightening is required from the RBA.
• Investors await Australian Trade data and US weekly. Jobless Claims on Thursday. 

The AUD/USD pair gains momentum above the 0.6400 mark during the early Asian trading hours on Thursday. The pair attracts some buyers following the FOMC pause and mixed US economic data. The pair currently trade around 0.6409, gaining 0.25% on the day. Meanwhile, the US Dollar Index (DXY) faces some selling pressure near 106.67 after retreating from the weekly highs of 107.11. US Treasury bond yields edge lower, with the 10-year standing at 4.73%.

As widely expected, the Federal Open Market Committee (FOMC) policy meeting decided to maintain the interest rate steady and hold the tightening bias. The FOMC noted that tighter conditions are expected to impact economic activity and the labor market while mentioning that the recent rises in long-term bond rates lowered the need for more tightening. The probability of a December increase being discounted by the market is around 22%, according to the CME FedWatch Tool.

About the data, ADP Private Sector Payrolls rose 113K in October from 89K in September, below consensus expectations of a 150k rise. Additionally, the JOLTS jobs opening data unexpectedly rose to 9.553M. The ISM Manufacturing PMI fell to 46.7 in October, lower than the market consensus of 49. The figure registered the lowest reading since July.

On the Aussie front, the Reserve Bank of Australia (RBA) will announce its policy decision at its November meeting next week. The market anticipates the central bank to raise the rate by 25 basis points (bps) at the forthcoming meeting, due to higher inflation.

Furthermore, the International Monetary Fund (IMF) highlighted in its annual assessment of the Australian economy that the economy is resilient while inflation remains sticky, arguing that further policy tightening is required from the RBA.

Looking ahead, the Australian Trade Balance for September and US employment data, including the weekly jobless claims will be due on Thursday. Friday’s Nonfarm Payrolls (NFP) will be the closely watched event by market participants on Friday.