AUD/USD rallies to near 0.6600 as US Dollar remains on backfoot ahead of US NFP data

• AUD/USD jumps to near 0.6600 as safe-haven appeal fades ahead of US labor market data.
• The US Dollar faces a sell-off despite Fed not offering cues about timing for rate-cuts.
• An upbeat wage growth data would provide a cushion to the US Dollar.

The AUD/USD pair delivers a sharp recovery to near the round-level resistance of 0.6600. The outlook for the Aussie asset seems resilient as the US Dollar has come under pressure despite the Federal Reserve’s (Fed) refusal to make speculation on interest rate cuts.

S&P500 futures have generated significant gains in the European session, indicating a decent improvement in the risk appetite of the market participants. The US Dollar Index (DXY) has slipped slightly below the crucial support of 103.00 as investors focus on the fact that rate cuts are invincible.

Meanwhile, investors await the United States Nonfarm Payrolls (NFP) data for January, which will be published at 13:30 GMT. According to the estimates, US employers hired 180K workers in January, lower than 216K personnel recruited in December. The Unemployment Rate is expected to increase to 3.8% against the former reading of 3.7%.

Average Hourly Earnings data will be keenly watched apart from the labor numbers. This would provide a fresh outlook on inflation. Higher wage growth leads to an uptick in retail demand, which fuels price pressures. As per the consensus, Monthly Average Hourly Earnings grew slower than 0.3% against a 0.4% increase in December. The annual wage growth is expected to increase at a steady pace of 4.1%.

Meanwhile, the Australian dollar recovered sharply as investors hoped that the Reserve Bank of Australia (RBA) would hold interest rates at 4.35% for a longer time. Price Pressures in the Australian economy are significantly higher than the desired rate of 2%. This week, the December inflation data released was softened than market participants had anticipated. The monthly Consumer Price Index (CPI) grew at a moderate pace of 3.4% against expectations of 3.7% and the former reading of 4.3%.