• The Australian Dollar advances ahead of Tuesday’s RBA policy decision.
• The RBA is expected to maintain the Official Cash Rate at 4.35% for the sixth consecutive meeting.
• The US Dollar declines as recent downbeat labor data fuels odds of a Fed rate cut in September.

The Australian Dollar (AUD) recovers its recent losses ahead of the Reserve Bank of Australia's (RBA) monetary policy decision scheduled for Tuesday. The RBA is widely anticipated to maintain the Official Cash Rate (OCR) at 4.35% for the sixth consecutive meeting. Traders will likely closely watch RBA Governor Michele Bullock's speech, which may provide insights into the Board's future policy direction.

The AUD faced challenges against the US Dollar (USD) due to central banks’ rapid policy adjustments and increasing fears of a hard landing for the US economy. Additionally, the second-quarter inflation data has diminished expectations for another RBA rate hike. Markets estimate an RBA rate cut in November, a move anticipated much earlier than previously forecasted for April next year.

The US Dollar loses ground as expectations grow for a 50-basis point (bps) interest rate cut by the US Federal Reserve (Fed) in September. The CME FedWatch tool indicates a 74.5% probability of this cut occurring at the September meeting, a significant increase from the 11.4% chance reported a week earlier.