AUD/USD trades stronger above 0.6650 on positive risk sentiment, hawkish RBA

• AUD/USD trades on a stronger note near 0.6670 in Monday’s early Asian session. 
• US University of Michigan sentiment rose for the first time since March.
• The RBA’s hawkish stance boosts the Aussie against the USD. 

The AUD/USD pair kicks off the new week on a positive note around 0.6670. A risk-on tone across markets and rising expectations of an imminent rate cut by the Federal Reserve (Fed) drag the US Dollar (USD) lower and provide some support to the pair. The minutes of the Reserve Bank of Australia (RBA) Board’s August meeting and the Fed’s Chair Jerome Powell's speech will be in the spotlight this week. 

Consumer Sentiment in the United States rose for the first time in five months. The preliminary University of Michigan Consumer Sentiment Index improved to 67.8 in August versus 66.4 prior, better than the market expectation of 66.9. Meanwhile, US housing data declined sharply in July. Housing Starts fell 6.8% in July to 1.238 million units from the 1.1% increase in June, while the Building Permits decreased 4.0% in July after rising 3.9% in June.

Markets are overconfident that the Fed will rush to cut the interest rate, but it depends on incoming data. According to the CME FedWatch Tool, traders have priced in nearly 76% odds of a 25 basis points (bps) Fed rate cut in its September meeting. A week ago, markets had priced in over 50% possibility that the Fed would implement a deeper cut and reduce by 50 bps. The Fed Chair Powell's speech at the Jackson Hole symposium on Friday could offer some hints about guidance on the pace of Fed easing. The dovish comments from the officials could exert some selling pressure on the Greenback. 

On the other hand, the hawkish stance of the Australian central bank continues to underpin the Australian Dollar (AUD). RBA Governor Michele Bullock noted that the central bank remains focused on the potential upside risks to inflation and does not consider any rate cuts in the near term. "Based on what the Board knows at present, it does not expect that it will be in a position to cut rates in the near term," Bullock said.