Dollar drops on strengthening greenback

dollar, money, manThe Australian dollar is weaker as the US Federal Reserve begins its two day meeting on monetary policy.

At 0700 AEDT on Wednesday, the local currency was trading at 76.18 US cents, down from 76.29 cents on Tuesday.

The US dollar rose against a range of currencies overnight as the Fed’s Federal Open Market Committee began its key meeting on interest rates.

Traders are waiting for Thursday morning’s communique to see if Fed policymakers drop the word “patience” in regards to a possible rate rise.

“The market expectation is that if the Fed drops the word ‘patience’ then that really does clear the path for a near future rate rise,” OMF senior client adviser on foreign exchange, Stuart Ive, said.

“They will need to raise rates sooner rather than later and, hence, why the US dollar has been so strong.”

Weaker commodity prices, in light of a firmer greenback, is also weighing down the Australian dollar.

The Australian dollar weakened on Tuesday after the minutes of the Reserve Bank of Australia’s March meeting convinced traders a near term rate cut was more likely.

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