Australian dollar gained ground against the greenback ahead of the Federal Reserve Banks two-day meeting on policy, at which the central bank will probably maintain the monthly pace of its monetary stimulus, that tends to debase the US dollar.
AUD/USD reached a session high at 0.9615 at 2:00 GMT, after which consolidation followed at 0.9608, gaining 0.26% for the day. Support was likely to be found at October 17th low, 0.9528, while resistance was to be encountered at October 24th high, 0.9671.
The Aussie advanced against the US dollar for the first time in four days, after Asian shares climbed, which provided support to higher-yielding currencies. The MSCI Asia Pacific Index of stocks soared 1.1%.
At the same time, Reserve Bank of Australia (RBA) Governor Glenn Stevens is scheduled to take a statement on Tuesday. He and his board will meet on November 5th, as there was a 94% probability that banks policymakers will retain the benchmark interest rate at the current record low level of 2.5%, according to swaps data by Bloomberg.
Meanwhile, Federal Reserve Bank policymakers are expected to meet on October 29th-30th. Analysts project that Fed officials will abstain from trimming the monthly pace of bank’s stimulus program this month and wait until March 18th-19th. According to projections the quantitative easing may be pared to 70 billion USD per month from the current 85 billion USD per month.
The final value of the index of consumer confidence in the United States slowed down during late October, reaching 73.2 and also marking its lowest level since December 2012. The final reading of the index in September was 77.5. Analysts had projected that this indicator will remain almost without a change in October in comparison with the preliminary value of 75.2. This would probably also lead to a slow down in consumer spending in the country and further boost the case that a delay in stimulus tapering will indeed occur.
“The market is looking for further confirmation that tapering is still some time off, and if we do get that we’ll get some more U.S. dollar weakness,” said Jim Vrondas, the chief currency and payment strategist at OzForex Ltd. in Sydney, cited by Bloomberg News. “We should see some reversal of the nervousness that we saw toward China and the Aussie dollar last week, and a move back toward the 97-cent mark.”
Elsewhere, the Australian currency was higher against the euro, with EUR/AUD cross slipping 0.25% on a daily basis to trade at 1.4373 at 7:53 GMT. AUD/NZD pair was steady, dipping 0.03% to trade at 1.1573 at 7:54 GMT. Reserve Bank of New Zealand (RBNZ) Governor Wheeler and his team will probably maintain the base interest rate at the current 2.5% at banks meeting on policy on October 31st. Traders saw an 83% probability that policymakers will consider a raise in the benchmark to 2.75% or even higher by June next year, swaps data by Bloomberg showed.