The Australian dollar has fallen against a stronger US dollar, after a senior US Federal Reserve official said the Fed still could taper its bond purchases this year.
At 0700 AEST on Monday, the local unit was trading at 93.69 US cents, down from 94.50 cents on Friday.
Since 1700 AEST on Friday, the Australian dollar has traded between 93.46 US cents and 94.60 cents.
The Fed’s decision to continue its bond purchases in full was a surprise last week with most market analysts expecting a wind-back of $US10 billion a month to $US75 billion.
On Friday, Federal Reserve Bank of St Louis president James Bullard told Bloomberg television that, if the economy picks up, the central bank could begin cutting back its bond purchases as early as October.
Mr Bullard is also a voting member on the Fed’s policy making committee that sets interest rates.
BK Asset Management managing director Kathy Lien said the US dollar was trading higher against all of the major currencies on the back of Mr Bullard’s comments.
“According to Bullard, the decision was a close one because tapering by $US10 billion is not a big deal,” Ms Lien said.
“In other words, the central bank felt that by reducing asset purchases by only $10 billion, the impact would be so nominal that they might as well decide to keep quantitative easing policy unchanged to give the economy its best chance of recovery for the next few months.”
