AUD/USD trades firmly near 0.6500 as Powell's dovish remarks underpin riskier assets

• AUD/USD holds onto gains near 0.6500 as Fed Powell's dovish comments improve demand for riskier assets.
• Fed's Powell argued in favor of reducing interest rates amid growing labor market concerns.
• Investors await RBA meeting minutes for fresh cues on the interest rate outlook.

The AUD/USD pair clings to gains near the key level of 0.6500 during the European trading session on Monday. The Aussie pair trades firmly as the appeal of risk-sensitive currencies has increased due to dovish commentary from Federal Reserve (Fed) Chair Jerome Powell at the Jackson Hole (JH) Symposium on Friday.

Fed Chair Powell stated at the JH Symposium that escalating risks to the United States (US) labor market are paving the way for interest rate cuts. He further added that the Fed could reduce interest rates quickly if employment risks start materializing in the economy.

"Downside risks to employment are rising, and if those risks materialize, they can do so quickly," Powell said.

Economists had anticipated that Fed Powell would repeat his call of holding interest rates at their current levels for a long time until members get clarity about the magnitude of tariff effects on inflation and the economy.

Fed Powell's dovish remarks weighed heavily on the US Dollar; however, it strives to gain ground after sliding to an almost four-week low. During the press time, the US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, trades 0.2% higher to near 98.00.

In Australia, investors await the Reserve Bank of Australia (RBA) meeting minutes of August's monetary policy, which will be published on Tuesday. In the policy meeting, the RBA reduced its Official Cash Rate (OCR) by 25 basis points (bps) to 3.6%.