Australian dollar marginally weaker ahead of Fed meeting

THE Australian dollar is marginally weaker as disappointing American factory data dents the greenback.

THE Australian dollar is marginally weaker as disappointing American factory data dents the greenback ahead of the US Federal Reserve’s monetary policy meeting.

At 0700 AEDT on Tuesday, the local currency was trading at 76.42 US cents, down from 76.49 cents on Monday.

The Australian unit hit its offshore highs, rising close to 77 US cents, after the New York Federal Reserve’s Empire State business conditions index for March showed a decline for the second straight month.

The greenback took another hit from US industrial production data from the Federal Reserve, which showed a weaker-than-expected increase in February.

The weak manufacturing numbers on the eve of the US Fed’s Federal Open Market Committee meeting convinced traders that interest rates may stay on hold for longer, BK Asset Management managing director Kathy Lien said.

“We had broadbased weakness in US data ... all surprising to the downside,” she said from New York.

“All of this led investors to believe that the US Federal Reserve will be emphasising patience at this week’s meeting.” Traders are also fearful that US Fed chair Janet Yellen may suggest leaving rates on hold in June.

“That is causing the US dollar to slide across the board,” Ms Lien said.

KEY MOVEMENTS

One Australian dollar buys: * 76.42 US cents, from 76.49 cents on Monday * 92.77 Japanese yen, from 92.72 yen * 72.27 euro cents, from 72.69 euro cents * 103.59 New Zealand cents, from 103.75 NZ cents * 51.52 British pence, from 51.80 pence

(*Currency closes taken at 1700 AEDT previous local session) Source: IRESS

Originally published as Australian dollar marginally weaker ahead of Fed meeting