AUD/USD on High Alert Ahead of RBA Policy Decision

The Australian Dollar (AUD) recovered some of its losses against the US Dollar (USD) on Friday, but market attention is now shifting to the Reserve Bank of Australia's (RBA) monetary policy announcement on Tuesday.

Traders have been pricing in a higher likelihood of an RBA interest rate hike following upbeat Australian job data for August, which added more jobs than expected. Strategists at Brown Brothers Harriman note that 'Australia's August labor force report reinforced the case for a 25bps RBA hike to 4.60% next week (90% priced-in),'

The CME FedWatch tool shows an almost 58% chance that the Federal Reserve will hike interest rates in both remaining policy meetings this year, further weighing on the AUD/USD pair's performance.