The Australian dollar has fallen against a stronger US dollar following the release of Federal Reserve minutes showing it was determined to wind back its economic stimulus program.
At 0700 AEDT on Thursday, the local unit was trading at 90.06 US cents, down from 90.19 cents on Wednesday.
Since 1700 AEDT on Wednesday, the Australian dollar has traded between 89.90 US cents and 90.45 cents.
The minutes of the Fed’s January policy meeting showed that members were determined to continue reducing its bond purchase program by $US10 billion a month.
OM Financial senior client adviser Stuart Ive said the Federal Reserve appeared surprisingly bullish in wanting to scale back the program, which is designed to stimulate lending.
He said the other important aspect of the minutes was that some members raised the possibility of increasing the federal funds rate relatively soon, maybe later this year.
“It looks as if the Fed is ignoring the weather-affected economic data; they believe that once the weather improves the economy will get back on track relatively quickly,” he said.
“It does show that the Federal Reserve is determined to get back to some sort of normalisation of policy sooner rather than later.
“So, that’s led to US dollar strength across the board and that strength will remain.”
Ive said he doesn’t expect the Australian dollar to lose too much ground ahead of the release of the HSBC Chinese manufacturing data for February, early on Thursday afternoon.
AAP