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• AUD/USD demonstrates strength around 0.6620 as the US Dollar underperforms amid US government shutdown.
• US ADP Employment Change data will be significant for speculation towards the Fed’s monetary policy outlook.
• The RBA kept its OCR steady at 3.6% on Tuesday.

The AUD/USD pair holds onto gains near 0.6620 during the European trading session on Wednesday. The Aussie pair demonstrates strength as the US Dollar (USD) continues to face selling pressure, with Washington entering a shutdown.

At the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades lower to near 97.70.

In Tuesday’s midnight, government funding expired after Republicans failed to pursuade Democrats to support the short-term funding bill in the House of Senate, which was expected to extend shutdown deadline to November 21.

The impact of partial US government closure will be significant on the Federal Reserve’s (Fed) decision in the monetary policy meeting later this month, as the majority of key economic data releases, including Nonfarm Payrolls (NFP) data, would halt. Such a scenario increases the significance of the ADP Employment Change data for September, which will be published at 12:15 GMT.

In the September monetary policy, the Fed reduced interest rates by 25 basis points (bps) to 4.00%-4.25%, citing labor market risks.

Economists expect US private employers to have added 50K fresh workers, slightly lower than 54K IN August.

Meanwhile, the Australian Dollar (AUD) struggles to extend Tuesday’s gains that were driven by the Reserve Bank of Australia’s (RBA) monetary policy announcement. On Tuesday, the RBA held its Official Cash Rate (OCR) steady at 3.6% and signaled no urgency for interest rate cuts.

RBA Governor Michelle Bowman also warned that inflationary pressures could prove to be persistent in the near term. “Components of monthly Consumer Price Index (CPI) are little higher than expected, inflation is not running away,” Bullock said.

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