AUD/USD rises to near 0.6550 ahead of Australian employment data

• AUD/USD gains to near 0.6550 as the Australian Dollar gains.
• Investors await the Australian employment data for October.
• The US Dollar weakens as traders raise Fed dovish bets.

The AUD/USD pair moves higher to near 0.6550 during the European trading session on Wednesday. The Aussie pair gains as the Australian Dollar (AUD) outperforms on hopes that the Reserve Bank of Australia (RBA) will maintain a restrictive monetary policy stance in its upcoming policy meetings.

The RBA is unlikely to cut interest rates in its near term as inflationary pressures are proving to be persistent.

Inflation in the Australian economy grew at a stronger pace of 1.3% in the third quarter of the year, against 0.7% growth seen in the second quarter. Meanwhile, RBA Deputy Governor Andrew Hauser has also expressed to need to hold interest rates steady unless officials gain confidence that inflation will return to the desired target.

Achieving the inflation goal will require policy to be restrictive enough to close output gap," RBA Hauser said at a UBS conference in Sydney. He added that the economy continues to "run above its potential", limiting room for "near-term rate cuts".

Going forward, investors will focus on the Australian employment data for October, which will be published on Thursday. The labour market data is expected to show that the economy added 20K fresh workers, higher than 14.9K seen in September.

Meanwhile, the US Dollar (USD) trades cautiously amid growing expectations that the Federal Reserve (Fed) could cut interest rates in the December policy meeting. At the time of writing, the US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, struggles near its weekly low around 99.30 posted on Tuesday.

According to the CME FedWatch tool, the probability of the Fed to cut interest rates by 25 basis points (bps) to 3.50%-3.75% in the December meeting has increased to 68% from 62.4% seen on Monday.