CANBERRA: The Australian dollar is higher as investors wait for a US interest rate decision. At 1700 AEST on Thursday, the currency was trading at 71.85 US cents, up from 71.59 cents on Wednesday.
National Australia Bank currency strategist Emma Lawson said the local currency had been range-bound on Thursday afternoon after reaching its highest level in three weeks, above 72 US cents, in the morning.
“We’re higher than the last couple of weeks but everyone’s just sitting and waiting for the Fed,” Ms Lawson said. She said the market was split, with just under 50 per cent of economists expecting a rate rise in the US.
The US Federal Reserve is due to make an announcement on whether it has raised its interest rate for the first time in nine years, after its two-day policy meeting ends early on Friday morning AEST. At 1700 AEST, the Australian dollar was at 86.82 Japanese yen, up from Wednesday’s close of 86.14 yen, and at 63.57 euro cents, up from 63.63 euro cents.
Australian bond futures prices are weaker as investors move to risk assets ahead of the Fed decision. US inflation data has eased expectations that the Federal Reserve will raise its interest rate this week.
RBC Capital Markets senior economist Su-Lin Ong said the Australian bond market was a little bit softer, with few drivers during the local session. “It’s pretty thin and quiet,” Ms Ong said.
“The price action in bonds is consistent with the modest risk-on tone. “We’re waiting for the FOMC tonight but there hasn’t been any major developments during our session.” Equities and currency movements in Australia and the region had been firmer as traders moved into risk assets, she said.
