The AUD/USD pair trades close to a six-month high at 0.6760 in Monday’s New York session. The Aussie asset holds gains as the US Dollar (USD) is on the backfoot due to growing speculation that the Federal Reserve (Fed) will begin reducing interest rates from the September meeting.Traders raise bets for Fed rate cuts in September as the US labor market strength appears to be moderating. June’s Nonfarm Payrolls (NFP) report showed that the Unemployment Rate rose to 4.15 in more than two years. Also, Average Hourly Earnings, a measure of wage growth, has declined expectedly, which has trimmed the risks of inflation remaining persistent.Higher expectations for early Fed rate cuts have improved the market sentiment. S&P 500 futures have recovered losses delivered in early Europe and have turned positive. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, has fallen to a near a three-week low of around 104.85.Contrary to market expectations, Fed officials signalled in their latest dot plot that there will be only once rate cut this year. Going forward, US Consumer Price Index (CPI) report for June will be the major trigger, which will be published on Thursday. The US inflation will influence market expectations for Fed rate cuts in September.On the Aussie front, surged expectations that the Reserve Bank of Australia (RBA) could tighten its policy further have kept the Australian Dollar (AUD) strong. Upside risks to price pressures have boosted bets for more rate hikes by the RBA.Being a proxy player to world’s second-largest economy, the Australian Dollar will be impacted by China’s CPI report for June, which will be published on Wednesday. The report is expected to show that price pressures grew at a higher pace of 0.4% from the prior release of 0.3% on year.More By This Author:USD/CAD Steadies Above 1.3600 As Prospects Of BoC’s Subsequent Rate Cuts Improve WTI Corrects From Two-Month High Near $84.00 Amid Caution Due To Storm Beryl USD/CHF Extends Losing Streak As Fed Rate Cut Prospects Improve