The Australian and New Zealand dollars remained near their lowest levels since early June on Wednesday with many investors on the sidelines before a Federal Reserve policy decision later in the day. The Aussie dollar was last down 0.1 percent at $0.7564 after going as deep as $0.7556, the lowest since June 1. The Australian currency has been stuck in a $0.7515/7620 range for several days. It broke the band to go as high as $0.7677 last week, but failed to stay at those levels as the US dollar gathered momentum.
The New Zealand dollar held at $0.7009, after making a new one-week low of $0.6995 earlier in the session. New Zealand government bonds eased, sending yields 2 basis points higher at the long end of the curve. Australian government bond futures gained, with the three-year bond contract up 1 tick at 97.780. The 10-year contract added 1.75 ticks to 97.2075.
Investors are focussed on how the US central bank characterises its policy, with an increase in benchmark rates at this meeting virtually guaranteed. The two-day meeting began on Tuesday, with fresh US economic data showing inflation still on track and financial markets remaining calm despite global trade tensions.
In contrast to the Fed, the head of the Reserve Bank of Australia (RBA) on Wednesday reiterated the need for local interest rates to remain at record lows as it awaits a revival in wage growth and inflation. The futures market does not fully price in the chance of a rate hike until October 2019.
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