The Aussie dollar’s recent strength has been unusual by historical standards but most pundits who think it will fall believe that a primary catalyst will be the move higher in US interest rates.
So this morning’s FOMC decision, which showed that the Fed governors are expecting interest rates to be higher in both 2015 and 2016, is new information that suggests the path of the taper and eventual increase in US interest rates is in train.
The result was the Aussie dollar lost 1 full cent to 0.9019 before recovering a little in the past hour.
We’ll see how it goes today, but if the US dollar finds support, the Aussies high might be in.
Glenn Stevens hopes so.