Last night's currency trading action was all about the FOMC meeting and what the Fed would announce.
Would they deliver a version of the 1960's 'Operation Twist,' or would we see something out of left field? As it turned out, the Fed pretty much met market expectations in terms of rebalancing its balance sheet from the short end to the long end of the curve, but it was its assessment that there was 'significant downside risks to the economic outlook' that really spooked the market and was the catalyst for the late session sell-off. As the markets plummeted, so too did the AUD. Having closed yesterday’s Australian equities session around the 1.0280 mark, the AUD drifted into the 1.0230s prior to the Fed’s decision, before slumping to close at 1.0043. With local equity markets under pressure this morning, the AUD has weakened even further, sliding to current levels in the 1.0030 range.