Australian dollar traded lower against its US counterpart on Wednesday, as investors awaited the outcome of Federal Reserves monthly meeting later in the day.
AUD/USD fell to a session low at 0.9335 at 0:40 GMT, after which consolidation followed at 0.9359. Support was likely to be found at September 9th low, 0.9168, while resistance was to be encountered at June 11th high, 0.9475.
Australian dollar found itself under pressure, after Barclays revised downward its forecast regarding Chinese economic growth for 2014 to 7.4% from 7.8% previously. “We note that fundamental challenges facing the Chinese economy have not been addressed, namely: industrial sector overcapacity, financial and fiscal risks (high corporate and local government debt, intertwined with risks associated with a growing shadow banking sector), a latent property bubble, and lower potential growth,” Barclays said in a note. This influenced the Aussie, as China is Australias largest export partner.
In addition, the Conference Board research group said that Australian leading index advanced 0.3% in July after the 1.1% drop in June.
The Melbourne Institute and Westpac Banking Corporation reported that their leading index for Australia added 0.6% in the month of July, after in June it remained flat. As this index is a crucial indicator for countrys growth, reported data submitted a positive signal for economic development in 2014. Reserve Bank of Australia (RBA) revised down its growth forecast for 2013 to 2.25% from 2.50% previously, but yet left unchanged its forecast for 2014 of economic growth of 3.0%, which came in consonance with the development, pointed by Australias leading index.
Meanwhile, at 18:00 GMT the FOMC is expected to announce its decision on monetary policy. Experts project that the US central bank will retain its benchmark interest rate at levels close to zero, while the monetary stimulus is expected to be reduced by 10 billion USD from its current monthly pace of 85 billion USD. At 18:30 GMT Fed Chairman Ben Bernanke will take a statement, as high volatility might accompany these two events.
Elsewhere, the Australian dollar was almost unchanged against the euro, with EUR/AUD cross dipping a mere 0.01% to trade at 1.4281 at 6:39 GMT. AUD/NZD pair was gaining 0.12% on a daily basis to trade at 1.1376 at 6:41 GMT.