Aussie dollar at six-week high

The Aussie dollar hit its highest level since late August after the US Fed explained why it delayed a rate rise.

The Australian dollar traded at its highest levels since late August after the US Federal Reserve said it held off on raising interest rates in September because of low inflation.

Minutes of the Fed policy meeting showed it felt near its goal of “full employment” but inflation still appeared stubbornly low.

“Traders must have interpreted the US Fed’s statement as dovish and they pushed the Aussie dollar higher,” said Stephen Innes, senior trader at OANDA Australia and Asia Pacific.

Asia shares were higher in response to the Fed’s comments, giving the Australian dollar added impetus.

At 4.25pm (AEDT), the dollar was trading at US72.85c, up from US71.74 late yesterday.

Morgan Stanley strategists said they have turned bullish on the Australian dollar and that the currency will likely rise to US75c in the short term, as global growth worries appear overdone.

“We now expect the US dollar to consolidate into year-end, supporting emerging-market currencies and contributing to a tactical Australian dollar rally to US75c before weakness re-emerges in 2016,” the firm’s team of Australian macro strategists said.

Dow Jones