AUD Falls Below 0.71 After Fed Hike Shrinks Australia's Rate Edge

The Australian dollar fell below 0.71 US cents after the Federal Reserve raised interest rates in the United States, reducing Australia's rate edge.

AUD/USD traded near 0.7089 at 22:07 UTC on September 16, down 0.6% from a previous close of 0.7134. The Fed's decision cut the yield advantage that had helped cushion the currency against a stronger greenback.

The rate decision changed the arithmetic behind the move: Australia's 4.35% cash rate now sits 47.5 basis points above the 3.875% midpoint of the new U.S. target range, down from a 72.5-basis-point gap before the meeting.