The Australian dollar declined after slower-than-expected inflation in the last quarter strengthened bets for the Reserve Bank to pause again next week. A gauge of the greenback rose as market sentiment turned cautious ahead of the Federal Reserve's policy decision.
AUD/USD fell as much as 0.9% to 0.6731 before trimming the drop to 0.6751. Leveraged selling of the Aussie dollar after weaker-than-expected inflation data was soaked up in part by bids ahead of option strikes layered from 0.6725 to 0.6729, according to an Asia-based FX trader.
The Bloomberg Dollar Spot Index rose 0.2%, nearly wiping out Tuesday's loss. Treasury two-year yield was up one basis point to 4.88%.
The Federal Open Market Committee is expected to raise rates a quarter point to the 5.25% to 5.5% range, an 11th increase since early 2022. Investors will be listening for clues from Fed Chair Jerome Powell about how determined the central bank is to raise again in 2023.
Source : Bloomberg
