AUD/USD continues to face pressure near 0.6300, US NFP in focus

• AUD/USD edges higher but remains below 0.6300 ahead of the US NFP data for January.
• The US NFP data would drive market expectations for the Fed's interest rate outlook.
• Investors await the Trump-Jinping meeting to get more developments on the trade relations between China.

The AUD/USD pair ticks higher in Friday's European session but continues to face pressure near 0.6300. The Aussie pair turns sideways as investors await the United States (US) Nonfarm Payrolls (NFP) data for January, which will be published at 13:30 GMT.

Market participants will keenly focus on the employment data, which will provide cues about how long the Federal Reserve (Fed) will keep interest rates steady between 4.25% and 4.50%.

According to estimates, the US economy added 170K workers last month, fewer than 256K in December. The Unemployment Rate is estimated to have remained steady at 4.1%. Signs of a strong job market would boost market expectations that the Fed will keep interest rates steady for longer. On the contrary, soft numbers would force traders to increase their dovish bets.

Ahead of the US NFP data, the US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, trades in a tight range below 108.00.

Meanwhile, the Australian Dollar (AUD) has performed strongly in the past few trading sessions amid expectations that US President Donald Trump and Chinese Leader XI Jinping will have a meeting to reach a deal and roll back tariffs. This week, China retaliated against 10% tariffs from Donald Trump by imposing 15% levies on coal and Liquified Natural Gas (LNG), and 10% for crude oil, farm equipment and some autos.

Such a scenario will be favorable for the Aussie dollar as Australia is the leading trading partner of China.

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