• AUD/USD prepares for a fresh upside as upbeat labor market cheers hawkish RBA bets.
• The market mood remains upbeat as the Fed is not expected to raise interest rates further this year.
• US Retail Sales is seen expanding at a slower pace of 0.2% than the 0.7% pace recorded for July.

The AUD/USD pair eyes further recovery toward the psychological resistance of 0.6500 as a stronger-than-expected Australian labor market report for August raised hopes for one more interest rate increase from the Reserve Bank of Australia (RBA).

Australian Bureau of Statistics reported that the labor force recorded a fresh arrival of 64.9K payrolls, higher than expectations of 23K. In July, the Australian employers shed 1.4K workers. The Unemployment Rate landed at 3.7%, in line with expectations and July’s reading.

Solid labor growth is expected to encourage RBA policymakers to deliver one more interest rate hike in the remaining year. It is worth noting that the RBA has kept interest rates unchanged at 4.1% in the past three monetary policy meetings.

Meanwhile, S&P500 futures added decent gains in the European session, portraying a risk-on mood. The market mood remains upbeat as the Federal Reserve (Fed) is not expected to raise interest rates further this year.

In spite of a slightly hotter United States inflation, investors do not see the Fed hiking interest rates further as the central bank considers core inflation majorly, and the impact of higher headline inflation would be limited. Meanwhile, investors await the US Producer Price Index (PPI) data, which will be published at 12:30 GMT.  

The headline PPI is seen expanding at a higher pace as gasoline prices turned costly in August, while the core PPI that excludes oil and food prices softened.

Apart from the US PPI data, monthly Retail Sales data will remain in focus. As per the estimates, the economic data expanded at a slower pace of 0.2% than the 0.7% pace recorded for July. A slowdown in consumer spending momentum indicates that higher inflationary pressures are biting household income.