Dollar lifts in late trade, Federal Reserve eyed

Many investors are seen anxious to place larger currency bets ahead of Janet Yellen’s speech.

Ms Yellen is scheduled to speak at the central bank’s annual meeting in Jackson Hole.

The Australian dollar retained its strength on Thursday, even as several analyst forecast that the currency is more likely to fall than rise in coming weeks.

At 5.30pm (AEST), the Australian dollar was trading at US76.29 cents, up from US76.13c at the same time on Wednesday.

Many investors appear anxious to place larger currency bets ahead of a highly anticipated appearance by US Federal Reserve Chairwoman Janet Yellen on Friday.

Ms Yellen is scheduled to speak at the central bank’s annual meeting in Jackson Hole, and many investors are hoping for some guidance on when and at what pace the world’s biggest economy will raise interest rates.

With markets currently pricing the odds that the Fed could lift rates in December at more than 50 per cent — a move that would support the US dollar — and the ongoing willingness of the Australian central bank to cut rates further if needed, the Australian dollar looks set to weaken to US$0.74 by year-end, said Imre Speizer, a senior market strategist at Westpac Banking Corp. in New Zealand.

“A break below the 0.7600 area would signal a decline towards 0.7500,” said Mr Speizer, echoing similar calls by other currency analysts.

On Thursday, however, the Australian dollar continued to defy the downside risk.

— Dow Jones newswires