The Australian dollar was trading flat today amid investors caution ahead of this week’s US Federal Reserve meeting.
In late trade, the local unit was fetching 93.20 US cents, hovering where it was early in the day and after some swings in the wake of the RBA minutes.
The currency showed a muted reaction to minutes of the Reserve Bank of Australia's September policy meeting minutes which kept the door open to further interest rate cuts, though it showed no urgency to move.
Caution ahead of the US Federal Open Market Committee’s two-day meeting, on Wednesday and Thursday, took its toll on the Aussie, Westpac senior currency strategist Sean Callow said.
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‘‘There was a pop higher on the initial reading of the RBA minutes and then it’s come back down,’’ Mr Callow said.
‘‘The minutes were what we should have expected, the RBA are not firmly neutral, they did refer to the possibility of another rate cut but they’re clearly not in a hurry.‘‘
The weakness in Asian equities is having an impact on the Aussie, Shanghai is down, Korea is down, so there’s a bit of regional nervousness and a fair bit of red ink around the region that looks to be taking a bit of an edge off the Aussie.
‘‘The path of the Aussie into the weekend will be very heavily determined by what happens in the US and elsewhere.’
’Westpac economists maintained their forecast of another rate cut in November, Mr Callow said.
Meanwhile, Australian bond futures prices were lower.The December 10-year bond futures contract was at 95.880 (implying a yield of 4.120 per cent), down from 95.935 (4.065 per cent) on Monday.
The December three-year bond futures contract was at 96.890 (3.110 per cent), down from 96.950 (3.050 per cent).
