AUD Lower Before Fed Minutes As USD Strengthen On Further Tapering Bets

The Australian dollar weakened versus its major peers amid speculation the U.S. Federal Reserve will continue to reduce stimulus that has buoyed asset prices around the world.

The Aussie held its biggest decline in three weeks against the greenback before minutes are released of the Fed’s meeting last month, when policy makers decided to begin tapering bond purchases. A gauge of construction activity in Australia declined in December, a report today showed. The nation’s currency traded near a five-year low versus its New Zealand counterpart.

“Fed policy and a stronger U.S. dollar will likely drive the Aussie lower,” said Janu Chan, an economist at St. George Bank Ltd. in Sydney. “There’s a key risk tonight with the minutes. Our view is that there’s enough strength in the U.S. economy to warrant tapering throughout most of 2014.”

Bloomberg

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