AUD Weakens Ahead of Fed Rate Decision

The Australian Dollar (AUD) has weakened against the US Dollar (USD) to around 0.7120 during Asian trading hours on Wednesday, as markets prepare for the Federal Reserve's interest rate decision later in the day.

Expectations of a US interest rate hike have provided support to the USD and acted as a headwind for the AUD/USD pair, with traders now pricing in nearly a 92.4% chance that the Fed will raise rates by 25 basis points (bps) at its September policy meeting on Wednesday.

Carol Kong, currency strategist at the Commonwealth Bank of Australia in Sydney, noted that 'a 25 basis-point increase is about 90% priced, implying the dollar will receive a modest boost if the Fed increases.'