AUD climbs overnight as all eyes turn to the US Federal Reserve

In short

1. The Australian dollar rebounded higher overnight against the US dollar
2. It also moved up against the NZD, JPY and EUR but remained flat against the GBP
3. Interest rates are likely to be cut in the US on Wednesday

Overnight, the Australian dollar posted modest gains against most major currencies.

Markets were largely positive, sending stock markets, commodity prices and currencies like the Australian dollar higher.

The Australian Dollar to US dollar exchange rate will be watched closely on Wednesday as the US central bank meet. The market is are expecting the worlds largest central bank to cut official interest rates as the economy in the US slows. It is the statement that follows the announcement that could move the currency markets. If the statement is more upbeat about the US economy, the US dollar could strengthen and the AUD/USD is likely to fall. Alternatively if the statement paints a bleaker picture, the chances of further interest rate cuts will increase and the US dollar could strengthen.