AUD buoyed by Fed decision to leave rates on hold

Daily Currency Update

The Australian dollar climbed through trade on Wednesday, moving back toward US$0.64, after the Federal Reserve (Fed) opted to leave rates on hold. With most analysts expecting the Fed would refrain from tightening rates again our attentions were squarely affixed to the accompanying policy statement and rate update. While Federal Reserve Chair, Jerome Powell and the FOMC offered little in the way of new guidance, two key changes to the statement helped the AUD push toward fresh intraday highs. While upgrading the growth outlook, the Fed also pointed to tighter financial and credit conditions as a key market for guiding future policy. While above potential growth and stubborn inflation warrant a hike the FOMC is keen to proceed carefully, suggesting tighter conditions may be sufficient in controlling further price pressures. US treasury yields moved lower allowing the AUD to outperform its major counterparts. With the RBNZ, Bank of Canada, Bank of England and ECB all tipped to have reached the end of their tightening cycles, the hawkish undercurrent driving calls for an AUD rate hike has added support to the AUD, particularly against key crosses. Having touched intraday highs to US$.64, our attentions turn to the Bank of England policy update this evening and US non-farm payrolls Friday as key markers shaping direction into the weekend.