The Australian dollar is a little higher against its US counterpart after a jump then fall in the greenback following the Federal Reserve’s lifting of its key interest rate by a quarter of a percentage point.

At 0635 AEST on Thursday, the Australian dollar was worth 75.75 US cents, up from 75.69 US cents on Wednesday.

Westpac says the initial positive reaction by the US currency to the Fed’s decision faded once the central bank’s chairman tone was factored in during the post-meeting press conference.

‘The US dollar and US bond yields jumped after the Fed hiked by 25 basis points to 1.875 per cent and signalled two more hikes this year,’ Westpac analysts said in a morning note.

‘However, the reactions were reversed during the press conference, as Fed Chair (Jerome) Powell’s tone didn’t quite match the statement’s.

‘The US dollar index initially jumped 0.5 per cent in response to the FOMC (Federal Open Market Committee) but quickly unwound that and is now down 0.3 per cent on the day.

‘(The Australian dollar) ground higher ahead of the FOMC, from 0.7560 to 0.7610, then fell to 0.7530 in response to the statement, and then rebounded to 0.7570 during the press conference.’

The key risk event for the local currency on Thursday would be the Australian Bureau of Statistics jobs data, due to be released at 1130 AEST.

‘May employment is expected to rise 19,000 and see the unemployment rate hold at 5.6 per cent. Westpac’s forecast is +17,000 but for the unemployment rate to round down to 5.5 per cent,’ the analysts said.

The prediction for the currency on Thursday: ‘When the smoke has cleared from today’s FOMC outcome, 0.7600 should cap the AUD.’

The Aussie dollar is lower against both the yen and the euro.


One Australian dollar buys:

* 75.75 US cents, from 75.69 on Wednesday

* 83.60 Japanese yen, from 83.70 yen

* 64.25 euro cents, from 64.46 euro cents

(*Currency closes taken at 1700 AEST previous local session)