Dollar soars on US Fed decision not to taper

DOLLAR maintains jump above US95c after the US Fed's decision not to taper its stimulus program.

The US Fed's decision saw the US dollar take a big hit across the board. (AAP Image/Julian Smith)

THE Australian dollar has maintained its jump above 95 US cents after the US Federal Reserve's surprise decision not to begin tapering its economic stimulus program.

At 12pm AEST today, the local unit was trading at 95.18 US cents, up from 93.58 cents yesterday.

Fed policy makers were widely expected to announce the tapering of their $US85 billion-a-month bond-purchasing program this morning, Australian time.

They instead left it in place and cut their growth forecast for this year and next.

ForexCT head of research Steven Dooley said the Aussie had been rallying since the beginning of the month on stronger international data and more neutral Reserve Bank comments.

The Fed's tapering decision could now see the Aussie once again headed toward parity with the US dollar, he said.

"I can't overstate how important that move above 94 US cents was," Mr Dooley said.

"It's a major support level.

"The big reason why we've had a big move lower in the Aussie over the last six to 12 months has been because of tapering but we think we're not likely to hear much about tapering for a while.

"There's a very good chance of the Aussie getting up towards parity.

"Our end of year projection is now between 97 and 98 US cents."

Australian bond futures prices also continued to rally on the Fed decision.

The December 10-year bond futures contract was at 96.055 (implying a yield of 3.945 per cent), up from 95.865 (4.135 per cent) yesterday.

The December three-year bond futures contract was at 97.050 (2.950 per cent), up from 96.880 (3.120 per cent).

###