Aussie jumped higher after the announcement that the Federal Reserve would not start tapering its asset purchases this month. However, after its earlier performance, the Australian dollar has eased back, and is now heading lower against its major counterparts.
Following the news that the Federal Reserve would not begin tapering its asset purchases, the Australian dollar jumped to a three-month high against the US dollar. The news was somewhat unexpected, since many had thought that the Fed would at least announce a modest $10 billion per month reduction in its asset purchase program.
Instead, the Fed cited concern about the sustainability of the US economy’s early recovery, and kept the asset purchase program untouched. Initially, the excitement over the liquidity and the stimulus boosted the Aussie. However, the Aussie is now pulling back on the prospect that economic recovery in the United States — and elsewhere — might remain sluggish.
Aussie is a commodity currency that relies heavily on economic conditions for its support. With China still a little slow in its economic growth, and with uncertainty over the US recovery, it’s hard for the Australian dollar to keep up.
At 13:34 GMT AUD/USD has dropped to 0.9495 from the open at 0.9520. EUR/AUD is up to 1.4277 from the open at 1.4204. GBP/AUD is up to 1.6952 from the open at 1.6960.
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