Aust dollar lifts on Fed wait

Local currency rises as US dollar falls while investors await tapering news.

The Australian dollar has pushed higher on expectations the United States Federal Reserve will announce a gentle start to tapering of its economic stimulus program.

At 0700 AEST, the local unit was trading at 93.56 US cents, up from 93.24 cents yesterday.

The US dollar is weaker against most major currencies ahead of the Federal Open Market Committee's September monetary policy decision at 0400 AEST tomorrow.

Arab Bank treasury dealer David Scutt said the market was expecting a cautious wind-back of the US central bank's economic stimulus program, putting pressure on the greenback.

"The Australian dollar continued to push higher overnight, largely on expectations that the Federal Reserve will only announce a small 'taper' this evening," Mr Scutt said.

"Given that committee members have been pre-conditioning markets for a reduction in asset purchases for months, we would find it highly unusual if we don't see a tentative reduction, say $US10-15 billion, at the conclusion of this meeting.

"Such an outcome will have very little impact. It's all but priced into markets."

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles