WSJ:Australian Dollar Steady as All Eyes Turn to the Fed
By JAMES GLYNN
SYDNEY--The Australian dollar hovered near three-week highs late Thursday as investors maintained a holding pattern ahead of an expected announcement of further economic stimulus for the U.S. economy early Friday local time.
Traders say the major risks surrounding the U.S. Federal Reserves' impending decision surround the design of the stimulus, rather than whether it will happen.
"If the Fed announces a rolling, open-ended, bond buying program likely involving both mortgage backed securities and Treasuries...this should elicit at least a mild risk-positive response," said Ray Attrill, senior currency strategist at NAB.
The Fed is also expected to forecast the maintenance of near-zero interest rates out until mid-2015 at least.
At 0600 GMT, the Australian dollar bought US$1.0470, unchanged from late Wednesday, and Y81.34, down from Y81.55.
Local data was scant Thursday with most attention focusing on the Reserve Bank of New Zealand which left interest rates on hold, but ramped up warnings about the world economy.
"New Zealand's trading partner outlook remains weak. Several euro-area economies are in recession and Chinese growth has slowed. The risk of significant deterioration in the euro area persists," RBNZ Gov. Alan Bollard said in a press release.
The RBNZ's benchmark interest rate was left at 2.50%.
