AUD/USD jumps to near 0.6670 as Fed dovish bets improve market mood

• AUD/USD advances to near 0.6670 as the market sentiment remains upbeat amid Fed dovish bets.
• The Fed is widely anticipated to cut interest rates on Wednesday.
• Investors await key US Retail Sales and the Australian employment data.

The AUD/USD pair climbs to near 0.6670 during the European trading session on Monday. The Aussie pair strengthens as the Australian Dollar (AUD) outperforms its peers amid strong appeal for risk-sensitive assets due to firm expectations that the Federal Reserve (Fed) will start the monetary-easing campaign on Wednesday.

S&P500 futures trade higher during European trading hours, demonstrating upbeat market sentiment. Meanwhile, the US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, trades marginally lower to near 97.50.

Market experts have expressed confidence that the Fed will cut interest rates on Wednesday and anticipates further monetary-easing in the remainder of the year amid growing labor market risks. Analysts at Morgan Stanley have forecasted that the Fed will cut interest rates by 25 basis points (bps) in all three remaining monetary policy announcements this year, citing downside labor market risks, with threats of high inflation remaining in place.

This week, investors will also focus on the United States (US) Retail Sales data for August, which will be released on Tuesday. The Retail Sales data is estimated to have grown at a moderate pace of 0.3%.

In Australia, investors await the employment data for August, which is scheduled for Thursday. The Unemployment Rate is seen steady at 4.2%. The economy is expected to have added 21.2K fresh workers, slightly lower than the prior reading of 24.5K. Signs of steady job market will likely weigh on market expectations of supporting interest rate cuts by the Reserve Bank of Australia (RBA) in the policy meeting later this month.