Australian Dollar rises ahead of Fed meeting following RBA's minutes

from MoneyTrading.com.au

The Australian dollar bounced from the day's lows on Tuesday aided by expectations of rising local interest rates and by a weaker US dollar ahead of a Federal Reserve policy meeting.

We are expecting the US central bank to say it wants to keep rates near zero for an "extended" period. The Australian dollar was initially pushed to the day's lows in a knee-jerk reaction to minutes of the Reserve Bank of Australia's (RBA) March policy meeting, which pointed to local rates rising gradually towards normal levels.

Some traders had thought the use of the word "gradually" meant the RBA was not as hawkish as before, but most analysts disagreed. They said the minutes showed the RBA still sees further rate rises as necessary, although bets on an April rate move would be a close call.