AUD Recovers from Weekly Low, Market Awaits Fed Meeting Minutes

The Australian dollar rebounded against the US dollar on Friday from its weekly low near 0.7065, currently trading at 0.70765, though the daily chart remains in negative territory. The US dollar broadly retreated against major currencies during Wednesday's European session as traders adjusted positions ahead of the release of the Federal Reserve's July monetary policy meeting minutes, hoping to glean further guidance on the central bank's near-term policy plans.

**Dollar Pullback Offers Respite for Non-USD Currencies**

Recent weak US economic data has marked a turning point for the dollar's trajectory. The July non-farm payrolls report released earlier fell well short of expectations, with a decline in job additions and slower wage growth, prompting markets to reassess the Fed's rate path and pushing the dollar index lower. As a result, major non-USD currencies broadly rebounded, and the Australian dollar seized this opportunity to recover from its lows. However, safe-haven demand stemming from geopolitical tensions continues to provide some support for the dollar, limiting its short-term downside.

**Market Focus on Fed Meeting Minutes**

The core focus this week centers on the Fed's upcoming meeting minutes. Investors will scrutinize the text to gauge internal discussions among policymakers regarding the inflation outlook, labor market conditions, and the likelihood of future rate hikes or cuts. Following the disappointing payrolls data, market expectations for a Fed policy shift have intensified, but public remarks from officials indicate lingering internal divisions. As such, the minutes are viewed as a key event influencing the dollar's near-term direction and overall FX market sentiment.

**AUD Faces Continued Tests**

Despite the Australian dollar's rebound alongside other non-USD currencies, its own fundamentals remain challenged. Previously released Australian employment data was weak, pressuring the currency. Meanwhile, market attention on US inflation data remains elevated—if upcoming CPI figures show sticky inflation, it could provide short-term support for the dollar and weigh on the Australian dollar again. Conversely, further cooling in inflation could intensify market speculation over Fed rate cuts, offering upside momentum for the AUD. On the technical front, the AUD/USD pair needs to reclaim the 0.7080 level to alleviate current downside pressure.