• AUD/USD falls to near 0.6700 as Aussie growth worries weigh on the Australian Dollar.
• Soft US PPI has renewed debate for potential Fed interest rate cut size.
• AUD/USD recovers from 38.2% Fibo retracement.

The AUD/USD pair corrects to near the round-level support of 0.6700 in Friday’s European session. The Aussie asset declines as the Australian Dollar (AUD) weakens amid growing worries over Australia’s economic growth due to the maintenance of high interest rates by the Reserve Bank of Australia (RBA).

Market experts worry that a long RBA hawkish interest rate stance could deteriorate labor market conditions. However, RBA officials continue to support maintaining their Official Cash Rate (OCR) higher as the battle against inflationary pressures is far from over.

Meanwhile, the US Dollar (USD) is also underperforming against its major peers as softer-than-expected United States (US) annual Producer Price Index (PPI) data for August has brought the debate over the likely interest rate cut to size by the Federal Reserve (Fed) back on the table. Market speculation for the Fed to start reducing interest rates aggressively from Thursday has strengthened. The CME FedWatch tool shows that the probability of the Fed reducing interest rates by 50 basis points (bps) to 4.75%-5.00% in September has increased sharply to 43%.