AUD/USD trades steadily, close to eight-week lows on Fed stimulus speculation

Australian dollar traded little changed and in proximity to eight-week lows against its US counterpart on Wednesday, as speculation over the timing of a possible stimulus scale back by the Federal Reserve continued to persist, while in Australia the wage cost index climbed at the slowest pace since the beginning of record back in 1997.

AUD/USD fell to a session low at 0.9286 at 0:40 GMT, after having touched its lowest point since September 16th at 0.9272 yesterday. Consolidation followed at 0.9298, dipping 0.03% for the day. Support was likely to be received at November 12th low, 0.9272, while resistance was to be met at November 12th high, 0.9368.

Earlier on Wednesday Australian dollar recorded gains, following the Australian consumer confidence report. According to data by Westpac Banking Corp. and the Melbourne Institute, their index, gauging consumer confidence in the country climbed 1.9% to reach a reading of 110.3 in November, approaching a peak recorded earlier in the year, after a 2.1% drop in October. It became clear that home prices in Sydney and the state of New South Wales rose.

However, the effect on the Aussie caused by the better confidence data has been neutralized, after the Bureau of Statistics in Australia reported that the wage cost index rose 0.5% in the third quarter of the year compared to the second, after a 0.7% gain in Q2. Preliminary estimates pointed a 0.7% increase in Q3. The annual performance of the index showed a 2.7% increase during the third quarter, which also came below expectations of a 2.9% advance.

These data points came one day after a survey by the National Australia Bank (NAB) revealed that business confidence in Australia fell to +5 in October from a 3.5-year high at +12 in September. Banks gauge of business conditions remained without change at -4 in October.

The yield on Australian 10-year government bonds dropped three basis points, or 0.03 percentage point, to reach 4.26%, after having climbed to 4.3%.

“The AUD is welded to 93 U.S. cents today, dampened by simmering expectations for U.S. Fed tapering in the next few months,” Annette Beacher, head of Asia-Pacific research at TD Securities in Singapore, wrote in a note to clients, cited by Bloomberg News. “We target 92 U.S. cents by year end.”

Meanwhile, Federal Reserve Bank policymakers are likely to trim the monthly pace of asset purchases to 70 billion USD at banks policy meeting on March 18th-19th from the current pace of 85 billion USD, according to the median estimate of 32 respondents in a survey, conducted by Bloomberg on November 8th.

Elsewhere, the Aussie was steady against the euro, with EUR/AUD cross dipping a mere 0.01% on a daily basis to trade at 1.4447 at 8:01 GMT. In addition, AUD/NZD pair was losing 0.04% to trade at 1.1315 at 8:02 GMT.