Oil, commodities drag Aussie lower as tonight’s Fed decision spooks
Markets were nervous overnight ahead of tonight’s major decision from the US Federal Reserve.
The US Fed looks likely to raise US interest rates by 25 basis points to a new range of 0.75% to 1.00%.
The potential move has seen sharemarkets and commodities lose steam while the US dollar has strengthened.
Overnight, oil fell 1.5% and is now down 13% in the last three weeks. Gold has fallen 5.1% over the last three weeks.
Europe in decline
The AUDUSD was caught up in this negativity and fell another 0.2%. .
However, the AUD was higher in Europe, with pollical worries continuing to hit the euro and British pound.
Tonight’s focus will, of course, be on US Federal Reserve, with their statement due at 5.00am and the press conference due at 5.30am (AEDT).
In addition to the hike, markets expect the Fed to signal a determination for further rate hikes in 2017. If the Fed sounds more cautious, the AUDUSD could rally.
Otherwise, UK employment and US CPI means we are likely to see a volatile night.
By Steven Dooley -- Currency Strategist (APAC)
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