Aussie dollar declines
At 0700 AEDT on Thursday, the local unit was trading at 94.72 US cents, down from 94.96 cents on Wednesday.
After its two-day policy meeting the Federal Open Market Committee (FOMC) said the US economy still needed support and it would keep buying $US85 billion in government bonds every month to encourage borrowing and spending.
The Australian dollar dropped as low as 94.42 US cents after the announcement, its weakest level since October 11.
National Australia Bank senior economist Spiros Papadopoulos said markets had expected the decision adding that the Fed’s statement was similar to the previous meeting.
“The Fed still sees the economy as growing at a moderate pace, but the unemployment rate remains elevated and fiscal policy is restraining growth,” he said.
“The Fed did change its assessment of the housing sector, now saying the recovery has slowed.”
Papadopoulos said the markets were expecting the Fed to give a stronger indication that a winding back of the stimulus would be possible in the future, especially after the recent government shutdown.
“The market’s response to the FOMC statement suggests that investors were expecting a more dovish commentary in the aftermath of the recent fiscal issues.
“The US dollar strengthened against all its key peers. The Australian dollar initially fell from above 95 US cents to below 94.50 cents, but has recovered some ground.”
The Australian Bureau of Statistics on Thursday releases building approvals figures for September.
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