AUD Edges Lower Amid Fed Hike Bets Ahead of Trump-Xi Summit

The Australian Dollar has edged lower against the US dollar as investors bet on further rate hikes from the Federal Reserve. The AUD/USD pair is trading near 0.7120 in the early Asian session, with traders waiting for key economic data and the Trump-Xi summit later this week.

Last week, the Fed raised interest rates by a quarter point, its first hike in three years, as officials sought to curb inflation. The market is now pricing in nearly 56.5% chance of another US rate hike when the Fed meets next in October.

The Reserve Bank of Australia's (RBA) decision on Thursday will also be closely watched, with markets expecting the unemployment rate to remain unchanged at 4.5% and the number of employed people to rise by 20,000 in August.

Strategists at UOB Group note that their '1-3 weeks view' on AUD/USD remains intact despite recent volatility. They believe a breach of 0.7140 would signal the recent downside phase has run its course.