The AUD/USD pair shifts its auction below the psychological support of 0.6500 in the early New York session. The Aussie asset faces immense selling pressure amid strength in the US Dollar due to America’s economic resilience and rising deflation risks in China due to poor demand.

S&P500 is expected to open on a mildly bearish note, following subdued cues from overnight futures. US equities are expected to face severe heat as Fitch warned downgrading of US banks including JP Morgan Chase. The US Dollar Index (DXY) continues to trade around 103.00 as investors await Federal Open Market Committee (FOMC) minutes for further guidance.

The release of the FOMC minutes will provide more clarity to investors about the interest rate guidance. Stickiness in the US core inflation and robust consumer spending momentum could force Federal Reserve (Fed) policymakers to consider one final interest rate hike. Also, Minneapolis Fed President Neel Kashkari said on Tuesday that more interest rate hikes are needed to rid of the ‘last mile’ in the journey towards achieving 2% inflation.

Meanwhile, the Australian Dollar is facing the wrath of the economic slowdown in China. Beijing’s new home prices fell in June for the first time this year, portraying a vulnerable realty outlook. Market sentiment also turned cautious after the Chinese government said it would no longer release monthly data about unemployment in young people, which had risen each month this year and reached 21.3 percent, NYT reported.

It is worth noting that Australia is the leading trading partner of China and a bleak economic outlook of China impacts the Australian Dollar.

This week, the Australian Dollar will show action after the release of the labor market report for July. According to the estimates, the Unemployment Rate is seen unchanged at 3.5% and fresh payroll additions were 15K, lower than the former release of 32.6K.