• AUD/USD grips gains above 0.6800 as investors see one more large Fed interest rate cut.
•  Investors await Fed Harker’s speech for fresh guidance on interest rates.
• The RBA is unlikely to cut interest rates this year.

The AUD/USD pair clings to gains above the round-level support of 0.6800 in Friday’s European session. The Aussie asset remains broadly firm amid growing speculation that the Federal Reserve (Fed) could deliver one more bumper interest rate cut in its monetary policy meeting in November.

The Fed pivoted to policy normalization on Wednesday when he announced a 50 basis points (bps) rate cut decision, pushing interest rates to 4.75%-5.00%. The signal was clear that the Fed is focused in preventing further deterioration in the labor market conditions. On the interest rate guidance, the Fed dot plot shows that policymakers see the federal fund rate heading to 4.4% by the year-end, which indicates the central bank will cut rates further by at least 25 basis bps.

However, traders see a 75-bps decline in the remaining two policy meetings in November and December, in which one interest rate decision would be a 50-bps rate cut. According to the CME FedWatch tool, the likelihood of the Fed reducing interest rates by 50 bps to 4.25%-4.50% in November is 43%, higher than the 37% recorded on Thursday.