The Australian dollar is higher on greenback weakness after the US Federal Reserve’s policy committee said it would not begin raising interest rates for “a considerable time”.
At 0700 AEST on Thursday, the local currency was trading at 94.13 US cents, up from 94.02 cents on Wednesday.
In the minutes of its last meeting, released on Thursday morning Australian time, the Federal Open Market Committee said it planned to stop buying bonds in October, setting an exit date to its stimulus program for the US economy.
But the committee said it would not begin raising its near zero benchmark interest rate for “a considerable time” after the asset purchase program ends, “especially if projected inflation continued to run below the committee’s two per cent longer run goal”.
The Fed’s failure to provide a clear signal on when rates would rise drove the US dollar lower, BK Asset Management managing director Kathy Lien said.
“The Fed minutes failed to satisfy investors, sending the dollar and yields sharply lower,” Lien said.
“The dollar should have reacted positively to the prospect of quantitative easing ending in the beginning of the fourth quarter and it did spike higher initially but 15 minutes after the Fed minutes were released, the dollar reversed course and gave up its gains.”
The Australian dollar extended its gains against the greenback but whether they could be sustained would depend on Thursday’s labour force figures, as well as Chinese trade figures, Lien said.
The jobless rate is expected to rise to 5.9 per cent, according to an AAP survey of 13 economists.
AAP
