AUD/USD Drifts Lower as Risk Trade Pulls Back

The AUD/USD is drifting lower today as the EUR/USD and Cable pull back following Friday's topside breakout. While the Aussie's interest rate differential continues to work in the currency pair's favor, recent employment and housing related data was disappointing, meaning the RBA could hold off on another rate hike at its next policy meeting unless fundamentals take a turn for the positive soon. With Australia quiet on the data wire this week, investors will likely hone in on upcoming U.S. numbers and the FOMC meeting on Tuesday. Should the Fed make a hawkish alteration to its monetary policy statement this could place some downward pressure on the Aussie over speculation that the Fed could tighten liquidity in the near future. However, should the Fed maintain its loose monetary policy stance for the foreseeable future, the Aussie's upward momentum could remain intact. Meanwhile, investors will receive a U.S. data set, including the Empire Index, Capacity Utilization, Industrial Production, and TIC long-Term Purchases.