AUD/USD is trading sideways above 0.6700 ahead of US data

• AUD/USD remains in a tight range above 0.6700 despite several tailwinds.
• An unflinching guidance from RBA Bullock on interest rates fails to lift the Australian dollar (AUD).
• Weak US JOLTS jobs data weighs heavily on the US dollar.

AUD/USD is trading in a tight range above the round level support of 0.6700 in Thursday’s European session. Australian assets are failing to find deals despite the weakness of the US dollar (USD) and Reserve Bank of Australia (RBA) Governor Michele Bullock on interest rates.

The US Dollar Index (DXY), which tracks the greenback against six major currencies, is extending its decline below 101.20. The US dollar faced selling pressure after the release of weak United States (US) JOLTS Job Openings data for July, which raised red flags on labor market conditions.

Michele Bullock said in her speech at the Anika Foundation in the Asian session on Thursday: “If the economy is broadly performing as anticipated, the board does not expect to be able to cut rates in the near term.” Her comments reinforced market speculation that the RBA is likely to cut interest rates this year.

The Australian asset firmed as investors looked for fresh clues on how much the Federal Reserve (Fed) will cut interest rates at its September meeting.

The Fed is expected to start cutting interest rates this month as downside risks to the United States (US) labor market have increased and progress in disinflation towards the bank’s 2% target remains intact. For meaningful clues about the likely size of the interest rate cut, investors await the US non-farm payrolls (NFP) data for August, due out on Friday.

In today’s session, investors will focus on the change in US ADP labor and ISM services PMI for August. Economists estimate that private sector payrolls rose by 145,000 from 122,000 in July. During the same period, activity in the services sector, which accounts for two-thirds of the economy, is expected to have expanded at a slower pace to 51.1 from the previous reading of 51.4.