• AUD/USD recovers from the lows and seeks fresh highs for the day. 
• A risk-on rally on Wall Street is supporting AUD ahead of the local key jobs data event.

AUD/USD has come back to life in the midday New York session as it attempts to print a fresh high for Wednesday. The pair has traveled between a low of 0.6629 and a high of 0.6673 so far.

Earlier in the day, the US Dollar rallied to a seven-week high as investors moved in due to its safe-haven allure amid the risk of a US debt default. Additionally, firm US Consumer Spending and Housing data gave the currency a boost as traders anticipated the higher odds of another Federal Reserve interest rate hike. 

The US Dollar index, a measure of the greenback's value against six major currencies, climbed as high as 103.11 
DXY, its strongest level since late March. It was last up 0.2% at 102.806.

The move in the high beta Aussie was helped by a rise in US indices on Wall Street. The debt ceiling talks continue after top-ranking lawmakers met with President Joe Biden at the White House on Tuesday. House Representative Speaker Kevin McCarthy argued that a debt-ceiling agreement by Sunday is doable. Meanwhile, US Vice President Kamala Harris is to brief on preventing a default on Thursday.

All eyes on Aussie jobs

Meanwhile, domestically, net AUD short positions had moved up to their highest levels since November as the Reserve Bank of Australia moves towards a perceived peak in the policy rate. With that being said, however, we have key data out later today in the Employment report. 

´´After the strong jobs report last month, we expect Employment to expand at a still-firm pace of +20k in April (cons: 25k, Mar: 53k) though the risk is biased to the upside given favorable seasonals,´´ analysts at TD Securities said.

´´We think labour demand is still outstripping supply and expect the tightness in the labour market to only ease gradually. We look for the participation rate to stay unchanged at 66.6% and the unemployment rate to rise to 3.6% (last: 3.5%) due to higher working-age population growth,´´ the analysts explained. ´´Overall, we think another strong jobs report may pressure the RBA to retain a hawkish tone and the June meeting could be another live decision.´´