AUD/USD little changed after Fed’s decision, remains around 0.7670

• Fed, as expected, keeps rates unchanged. 
• FOMC statement, a no-event, taking into account market reaction. 
• Pair remains in day’s range. 

The AUD/USD pair rose 15 pips after the release of the FOMC statement and the pulled back, falling slightly below 0.7670, the level it had before the decision. Market reaction to the Fed has been limited. The pair spiked to 0.7685, below the daily high at 0.7696 and then dropped to 0.7664. 

USD, Fed unchanged 

As expected, the Federal Reserve kept interest rate unchanged. The statement contained little changes. According to the central bank economic activity has been rising at a “solid rate” despite the impact of hurricanes and mentioned that the labor market continues to strengthen. Today’s ADP report pointed in the same direction, with numbers above expectations. 

Market participants now focus on Thursday’s announcement on who will be the next chief at the Fed. President Trump is expected to name Jerome Powell. 

The next FOMC meeting will be December 12-13 with Yellen still at the chair. The CME FedWatch Tool shows the possibility of a rate hike at 97.5% according to current market prices, marginally higher from yesterday’s odds. 

The US dollar dropped immediately after the statement but then recover ground and gained some momentum as US yields reversed from its previous trend. Bonds are moving off daily highs as USD gains strength. Overall, the impact across financial assets has been modest. 

Levels to watch

At the moment of writing, AUD/USD was testing levels below 0.7670 and under an intra-day uptrend line. A consolidation under that area could increase the bearish momentum, exposing daily lows located at 0.7645. Below the next support could be located at 0.7620/25 (Oct 27 low). On the upside, resistance levels might be located at 0.7700, 0.7720 (Oct 26 high) and 0.7765/70 (Oct 24 low).