AUD/USD strengthens above 0.6700 as traders await US data

The AUD/USD pair gains traction near 0.6715 during the early Asian session on Tuesday, bolstered by a softer US Dollar (USD). Traders await a raft of key US economic data this week, including Nonfarm Payrolls (NFP), for clues on the monetary policy outlook. On the Aussie front, the Consumer Price Index (CPI) inflation data for November is due on Wednesday. 

The United States (US) carried out a large-scale military strike against Venezuela on Saturday. US President Donald Trump announced that Venezuelan President Nicolas Maduro and his wife have been captured and flown out of the country. On Monday, Maduro pleaded not guilty to US charges in a narco-terrorism case against him, kicking off an extraordinary legal battle with major geopolitical ramifications, per Bloomberg. 

Nonetheless, markets are largely shrugging off events in Venezuela, after a US raid led to the capture of Maduro and his wife. The US December employment report will take center stage on Friday and could offer some hints about the outlook for monetary policy. The market consensus forecast for NFP is for a gain of 55,000 jobs. In case of a stronger-than-expected outcome, this could strengthen the US Dollar (USD) and create a headwind for the pair.

Growing expectations for interest rate hikes by the Reserve Bank of Australia (RBA) could provide some support to the Aussie. The hawkish comments by RBA Governor Michelle Bullock after the December monetary policy decision showed that policymakers’ concerns about inflation have taken center stage and that the possibility of a rate hike was on the table last month. Analysts note that a hotter-than-expected core inflation reading for the fourth quarter could trigger a rate hike at the RBA’s February 3 meeting.