Australian Dollar Retreats As Most Asian Shares Traded Lower

The Australian dollar retreated from recent highs against its major counterparts in the Asian session on Wednesday, as most Asian stocks traded lower, as traders remain cautious ahead of the U.S. Fed’s most anticipated monetary policy decision in years later in the day. Uncertainty about the size of interest-rate reduction is weighing on market sentiment after a report unexpectedly showed a modest increase by U.S. retail sales in the month of August.

While the data is positive for the economy, it was seen as reducing the likelihood the U.S. Fed lowering interest rates by 50 basis points. Irrespective of the size of the cut later in the day, the Fed is still expected to continue lowering rates over the remainder of the year.

Slight weakness in mining and energy stocks, also weighed on the investor sentiment.

In the Asian trading now, the Australian dollar fell to 95.33 against the yen, from a recent high of 96.02. The next possible downside target for the aussie is seen around the 92.00 region.

In economic news, Japan posted a merchandise trade deficit of 695.3 billion yen in August, the Ministry of Finance said on Wednesday. That beat forecasts for a shortfall of 1,380 trillion yen following the 628.7 billion yen deficit in July. Exports were up 5.6 percent on year, shy of expectations for an increase of 10.0 percent and slowing from the 10.2 percent gain in the previous month. Imports rose an annual 2.3 percent versus forecasts for a jump of 13.4 percent and down from 16.6 percent a month earlier.

Against the U.S. dollar and the euro, the aussie slipped to 0.6750 and 1.6477 from a recent more than a 2-week high of 0.6774 and a 2-week high of 1.6429, respectively. If the aussie extends its downtrend, it is likely to find support around 0.65 against the greenback and 1.67 against the euro.

Against the Canada and the New Zealand dollars, the aussie edged down to 0.9175 and 1.0894 from recent highs of 0.9202 and 1.0920, respectively. On the downside, 0.90 against the loonie and 1.07 against the kiwi are seen as the next support levels for the aussie.

Looking ahead, U.K. house price data for July, Eurozone CPI data for August and construction output for July are due to be released at 5:00 am ET in the European session.
In the New York session, U.S. building permits for August, housing starts for August and U.S. EIA weekly crude oil data are slated for release.

At 2:00 pm ET, Federal Open Market Committee (FOMC) of the U.S. Federal Reserve will conclude its two-day meeting and announce the decision on interest rates.

Half-an-hour later, the Fed Chair Jerome Powell will conduct a press conference after the announcement of U.S. Fed monetary policy decision.