AUD/USD holds above 0.6665 awaiting US Fed's decision

• The Aussie Dollar ticks down from year-to-date highs at 0.6690 but remains steady above 0.6665.
• The US Dollar is trimming some losses as investors grow cautious ahead of the Fed's decision.
• In Australia, Thursday's employment figures might provide further clues about the RBA's rate path.

The Australian Dollar is trading lower from year-to-date highs at 0.6690 on Wednesday, yet with downside attempts limited above previous highs, at the 0.6665-0.6670 area, as investors await the outcome of the Fed's meeting, due later today.

The US Dollar Index, which measures the value of the Dollar against a basket of currencies, is trimming losses after having depreciated nearly 2% from Friday's lows. Investors are cutting US Dollar short holdings ahead of the Fed decision, which is pushing most USD peers lower from relevant highs.

Australian Dollar trims gains as risk appetite falters

The Aussie rallied about 2.7% over the last two weeks as weak US employment data prompted investors to ramp up their bets on Fed monetary easing for the following months. Future markets are fully pricing a quarter-point rate cut on Wednesday, and the chances of two more cuts in October and December have risen beyond 70% from about 35% one month ago.

US data released on Tuesday showed that retail consumption remains resilient. August's Retail Sales increased 0.6%, beyond market expectations of a 0.2% growth, and July's data was revised up to a 0.6% rise from the 0.5% previously estimated.

In Australia, the focus is on the August Employment release, due on Thursday, for further insight into the RBA's next monetary policy decision. The Unemployment rate is expected to have remained steady at 4.2% but net employment growth is seen slowing down to 22K from 24.5K in July.