The AUD/USD pair dropped sharply early in today’s Asian session after the People’s Bank of China (PBOC) decided to revise its yuan reference rate yet again. From the previous 6.1351, the PBOC set it at 6.1460. This led the AUD/USD pair to fall further in today’s session after experiencing an initial drop in value during yesterday’s FOMC statement.
In the statement, the FOMC announced that it would cut its QE program by another $10 billion starting next month. This would bring down the stimulus from $65 billion to just $55 billion by April. In addition, the Fed said that it would now consider other factors other than the unemployment rate with its forward guidance. Previously, they mainly focused only reaching the 6.5% unemployment rate threshold. Right now they said that they would “take into account a wide range of information”. These include: “measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments.”
This and the development in China severely affected the AUD/USD pair. After enjoying a comfortable spot within the 0.9120-0.9140 range, it is currently nearing the 0.9000 level again. It is trading at 0.9015 at the moment, with initial resistance seen at 0.9091, followed by 0.9114. Meanwhile, initial support is at 0.8971, followed by 0.8949.
The NZD/USD pair was also affected by the FOMC statement, with the impact still being felt in today’s Asian session. The pair spent the last few days above the 0.8600 area, but has since seen a significant decline back to late last week’s levels. It is currently trading at 0.8530, with initial resistance seen at 0.8600, followed by 0.8621. Meanwhile, initial support is at 0.8492, followed by 0.8470.
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