AUD/USD jumps to near 0.6530 as Fed dovish bets weigh on US Dollar

• AUD/USD climbs to near 0.6530 as the US Dollar has been battered by firm Fed dovish expectations.
• Fed's Williams supports interest rate cuts to boost GDP growth.
• Traders doubt whether the RBA will cut interest rates again in the policy meeting next month.

The AUD/USD pair advances to near 0.6530 during the European trading session on Thursday. The Aussie pair strengthens as the US Dollar (USD) faces sharp selling pressure, with traders becoming increasingly confident that the Federal Reserve (Fed) will cut interest rates in the September meeting.

At the time of writing, the US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, falls to near 97.90.

According to the CME FedWatch tool, there is an 87% chance that the Fed will cut interest rates in the September monetary policy meeting.

Meanwhile, Fed officials are also supporting the need to bring interest rates down amid growing United States (US) economic concerns. On Wednesday, New York Fed Bank President John Williams signaled that there is a need to cut interest rates at some point to support the slowing Gross Domestic Product (GDP).

Williams explicitly didn't endorse interest rate cuts for the September policy meeting, citing that officials need more data before reaching a conclusion.

For more cues on the interest rate outlook, investors await the US Personal Consumption Expenditure Price Index (PCE) data for July, which is scheduled for Friday.

In Australia, investors doubt whether the Reserve Bank of Australia (RBA) will cut interest rates again in the policy meeting in late-September. Higher-than-expected Australian Monthly Consumer Price Index (CPI) data for July has forced traders to reassess RBA dovish expectations.

The Australian Bureau of Statistics reported on Wednesday that inflationary pressures rose at an annual pace of 2.8%, faster than expectations of 2.3% and the prior reading of 1.9%.