Dollar falls ahead of US Fed meeting

The Australian dollar is a third of a US cent lower as traders play it safe ahead of the crucial US Federal Reserve meeting later in the week. Resource-9

At 0700 AEST on Tuesday, the local unit was trading at 92.07 US cents, down from 92.45 cents on Monday.

Since 1700 AEST on Monday, the Australian dollar traded between 91.88 US cents and 92.89 cents.

The Fed ends its two day policy meeting early on Thursday morning, Australian time, and is expected to make an announcement on the winding down of its $85 billion a month economic stimulus plan.

Expectations that it would start tapering the program in September caused the Australian dollar to drop by more than 10 US cents since early May.

Investors are moving out of riskier assets such as stocks and the Australian dollar ahead of the meeting, Boris Schlossberg, MD, BK Asset Management New York,  said.

“Although today and tomorrow may be typical of quiet summer trade, the action is likely to pick up markedly as the week proceeds,” he said.

“The Aussie has been unable to clear the key 93.00 US cent level for the past month and a half as sentiment towards the unit remains negative.

“Investors continue to worry about the spillover effects of the slowdown in China and the potential for further rate cuts from the Reserve Bank of Australia.”

Locally on Tuesday, official building approvals figures for June will be released, and RBA governor Glenn Stevens is delivering a speech in Sydney.

Investors will be combing the speech for clues on the timing of the RBA’s next interest rate cut.

AAP

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