AUD underperforms as markets turn risk-averse ahead of FOMC meeting

The Australian Dollar has declined against its major currency peers, trading 0.45% lower at around $0.7135 against the US Dollar during the European trading session on Monday.

This comes as market sentiment turns risk-averse due to a further escalation in Federal Reserve interest rate hike expectations.

According to strategists at Brown Brothers Harriman, the FOMC is poised to deliver a 25bps hike to a target range of 3.75%-4.00% on Wednesday, marking its first hike since July 2023.

The sharp repricing of Fed's interest rate expectations has resulted in a significant jump in the US Dollar Index (DXY), which gauges the Greenback's value against six major currencies and trades 0.4% higher to near $99.50.