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Australian dollar falls as Fed hike bets and oil risk weigh

AUD/USD slipped more than 0.29% to 0.6963, while CME FedWatch put the odds of a December 25 basis point hike at 78%.

Reported · Written up by our desk · Major Pairs

The Australian dollar turned lower on Wednesday, falling more than 0.29% as traders reassessed Federal Reserve rate hike expectations, FXStreet reported. The AUD/USD pair was last around 0.6963.

FXStreet said the move followed the release of Fed minutes that kept a hawkish tone, with some participants expecting another hike toward year end and others viewing the September action as more precautionary. The outlet added that several participants do not see policy as restrictive or only mildly restrictive.

According to FXStreet, market pricing remained skeptical about an October hike, with money markets instead leaning toward December, where the odds of a 25 basis point increase were 78% based on the CME FedWatch Tool. The same update pointed to US sentiment signals, including rising one year inflation expectations in the New York Fed Survey of Consumers, which moved from 3.6% to 3.9%.

FXStreet also tied broader risk sentiment to the move, noting US equity markets posted losses while US Treasury yields fell, with the US Dollar Index rising 0.4% to 102.24. The update referenced additional uncertainty around Middle East oil risk, which it said could weigh on the Australian dollar.

Latest closeDollar index 102.19 ▲0.3%

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