The Australian dollar has climbed back above 80 cents

Photo by David Rogers/Getty Images

The Australian dollar is back above 80 cents, boosted by broad-based US dollar weakness ahead of tomorrow’s US Federal Reserve meeting.

Here’s the scoreboard as at 8.05am AEST.

AUD/USD 0.8008 , -0.0001 , -0.01%
AUD/JPY 89.35 , -0.01 , -0.01%
AUD/CNH 5.2717 , -0.0012 , -0.02%
AUD/EUR 0.6676 , 0 , 0.00%
AUD/GBP 0.5926 , -0.0002 , -0.03%
AUD/NZD 1.0941 , -0.0002 , -0.02%
AUD/CAD 0.9843 , 0.0005 , 0.05%

After opening the day at .7960, the AUD/USD ground higher over the course of Tuesday’s trading session, helped by the release of the minutes of the Reserve Bank of Australia’s September policy meeting and positioning adjustments ahead of the Fed’s interest rate decision that will arrive in the early hours of Thursday morning on Australia’s east coast.

“Yesterday’s September RBA Board minutes didn’t really resonate, though the upbeat message on the labour market and absence of any dialling up of concerns bout the strengthening of the AUD this year, were ‘non-negatives’,” said Ray Attrill, head of FX strategy at the National Australia Bank, in his morning note.

Along with the upbeat tone of the minutes, the Aussie also benefited from another bout of US dollar weakness, said Greg McKenna, chief market strategist at AxiTrader.

“With no incentive for position traders to do anything before the FOMC announcement, shorter-term traders were free to find the path of least resistance, and that was a weaker USD,” he said.

As a result, the AUD/USD closed the session buying .8012, representing a gain of 0.65%.

The Aussie also rose against most major crosses aside from the New Zealand dollar, albeit by a smaller margin.

AUD/USD 5-Minute Chart

With no major releases due, aside from Japanese trade data for August scheduled in Asia, movements in the Aussie today are likely to be limited as traders await the release of the Fed’s interest rate, monetary policy statement and updated economic forecasts, including individual FOMC member forecasts on the outlook for the Fed funds rate, at 4am AEST Thursday morning.

“The keenest point of focus is on what if anything the Fed does with its ‘dot plot’ summary of individual FOMC members forecasts for the appropriate Feds Funds rate at end 2017, 2018 and 2019, 2020 and the ‘long term’,” said the NAB’s Attrill.

He says that median member forecast is likely to remain much the same for this year and next, with the Fed likely to lift rates again this year, followed by a further three rate increases in 2018.

“It will require four FOMC members to lower their individual dots to produce a fall in the median. A few will likely lower theirs, but not enough to lower the median,” he says.

“If some members do shift down but not enough to lower the median 2017 and 2018 dots, we’d expect yields to rise and the USD to rally, but with gains tempered by claims that this a ‘dovish’ no change.”

Along with the Fed’s dot plot, there will also be plenty of interest on the start date of the Fed’s balance sheet normalisation, widely expected to be some point in the next month or two.

Janet Yellen will also conduct her scheduled bi-meeting press conference at 4.30am AEST.

Outside of the US rate decision, markets will also receive UK retail sales and US existing home sales during Wednesday’s trading session.

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