AUD/USD soars to near 0.6870 on China's big-bang stimulus

• AUD/USD jumps to near 0.6870 as the Australian Dollar strengthens on multiple tailwinds.
• China's massive stimulus announcement and RBA's hawkish rate stance strengthen the Aussie Dollar.
• The next move in the US Dollar will be influenced by the US core PCE inflation data.

The AUD/USD pair rallies to near 0.6870 in Tuesday's North American session. The Aussie asset gains strongly after China's massive stimulus boost to revive household spending and real estate demand and uplift economic growth.

In a press conference on Tuesday, China's top regulators outlined a sharp decline in key interest rates and establishment of RMB500 billion swap facility and RMB300 billion re-lending fund by the People's Bank of China (PBoC). The announcement of the big-bang stimulus has strengthened the Australian Dollar's (AUD) outlook, being a proxy to China's economy.

The Australian Dollar was already outperforming on Reserve Bank of Australia's (RBA) hawkish policy outcome in which the central bank left interest rates unchanged at 4.35% for the eighth time in a row. The RBA kept interest rates steady on upbeat labor market conditions and price pressures remaining persistent.

Meanwhile, the US Dollar (USD) faces selling pressure as investors expect that the Federal Reserve (Fed) could opt for continuing the aggressive policy-easing cycle. The US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, slumps to near 100.60.

According to a CME FedWatch tool, the likelihood for the Fed to cut interest rates by 50 bps to 4.25%-4.50% in November is close to 52% from 29% a week ago.

This week, investors will keenly focus on the US Personal Consumption Expenditure inflation (PCE) data for August, which will be published on Friday. Economists expect the core PCE price index, which is the Fed's preferred inflation gauge, to have grown to 2.7% from 2.6% in July.