The Australian dollar is enjoying a cautious Fed as it remains resilient above the key 70 cents level. Overnight the US Federal Reserve decided to not raise interest rates at its January meeting however the markets also saw the signs that it is unlikely to raise in March either. This along with surprising inflation data has seen the local currency remain above US 70 cents where it is now starting to enjoy some support from again.
If the local currency is to remain resilient above 70 cents, this will be viewed as significant due to the psychological nature of that level and the role it has played in the last six months.
Despite rallying for a few days, the ASX200 remains under intense selling pressure and is likely to be testing the key 4900 again shortly. US stocks didn’t respond well to the latest Fed message and the markets saw some signs of concern from the Fed that they may not be able to stick with their intended path for 2016.
People remain nervous with global markets with increased volatility and sharp falls which have now been followed up by a less than optimistic US Federal Reserve.