AUD/USD Above 0.9250 Before Fed Meeting Next Week

The Australian dollar headed for a second-straight weekly gain amid speculation Federal Reserve officials meeting next week will maintain bond purchases that have supported higher-yielding assets around the world.

The Aussie weakened versus its Japanese counterpart as traders boosted bets for the Reserve Bank of Australia to lower borrowing costs when policy makers meet on Aug. 6. New Zealand’s currency is set for a five-day advance against its 16 major peers after the nation’s central bank said yesterday a removal of monetary stimulus “will likely be needed in the future,” prompting wagers for an increase to the benchmark rate as early as January 2014.

“A lot will depend on how financial conditions evolve in the U.S. and whether the Fed looks to reduce its stimulus,” said Peter Dragicevich, a Sydney-based currency economist at Commonwealth Bank of Australia (CBA), the nation’s largest lender. “We expect it will at some point in 2013, but there is a risk that it delays it by a meeting or two. We don’t think the Aussie will fall too far.”


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