Australian dollar jumps after Fed holds rates4

September 18, 2015

The Australian dollar is trading higher today after the US Federal Reserve refrained from lifting interest rates, sending the local currency on a wild ride with a run towards the US73c mark.

At 8.57am (GMT) the Aussie dollar was trading at US72.38c up from US71.61c in yesterday’s trade.

Shortly after the US Fed’s decision on rates, the Australian dollar traded as high as US72.75c before dropping back down through the US72c mark after the following monetary statement by Fed president Janet Yellen.

Dr Yellen noted that the Fed was not satisfied with weak inflation which is currently well below the target of 2% and they would also like to see more strength in the employment market before pulling the trigger on rates.

Despite the setback, she mentioned that the market should brace for an interest rate rise at some time in the nearest future with the market now pricing in a 100% chance of a hike by January.

In a speech this morning to the house of representatives RBA governor Glenn Stevens sounded upbeat by noting that although the economy is not rising as fast as anticipated, it is still growing at 2% and taking into account the big problems with Australia’s biggest trading partner China, the country will come out of this episode okay.

Some analysts do not buy Mr Stevens story with 50% of analysts predicting that the RBA will have to cut rates further in order to boost the economy.

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