Australian dollar pressured as US rate hike looms

The Australian dollar hit another fresh four year low yesterday after a change of tone from the US Federal Reserve indicating that the central bank may lift interest rates in April of next year.

At 4.30pm (AEDT) the Australian dollar is trading at US81.32 cents after falling as low as US81.06 cents in yesterday’s trade.

Since the beginning of the year the Fed has taken the stance that rates will be on hold for "considerable time" after the end of their stimulus program they began several years back to kick start the economy.

They pointed to the employment market and Inflation by noting,

“if incoming information indicates faster progress toward the committee's employment and inflation objectives than the committee now expects, then increases in the target range for the federal funds rate are likely to occur sooner than currently anticipated,”

The unemployment rate in the US stands at 5.9%, its lowest level in 12 years.

When pressed on the exact timing of an Interest rate rise, and what she meant by a couple, Fed Chair Janet Yellen told a news conference "So, a "couple," I believe, the dictionary probably says a "couple means two” Which now has analysts pricing in a rate hike in April after two more Fed meetings..

CPI numbers from the US came in at 1.7% yesterday against analysts’ expectations of 1.6% and well below the Fed’s target of 2%.

“This may be one of the reasons for the Federal Reserve to hold off lifting rates a little longer if Inflation continues to underperform” noted analysts from Fibogroup forex brokers

“If the oil price continues to drift lower this may also have an impact on the rate decision as consumers will have more money in their pockets at the end of the day which means less pressure on Inflation”