Fed Meeting Uncertainty Sinks Aussie and Kiwi Dollars

The Australian and New Zealand dollars were under pressure on Wednesday as investors struggled to price the risks from a looming Federal Reserve meeting. Markets imply a 92% chance of a quarter-point rate rise, with analysts assuming the Fed will have to deliver to safeguard its anti-inflation credibility.

According to Chris Weston, head of research at Pepperstone, 'Warsh has deliberately injected a significant distribution into the potential policy outcomes, and markets could experience a fairly wild hour or two as traders react to the statement, the new dot plot, the Fed's economic projections and Warsh's press conference.'

Markets are priced for at least three Fed hikes by early next year, suggesting the greenback is vulnerable should Fed Chair Kevin Warsh sound anything less than hawkish.

The Aussie was pressured at $0.7125, having eased 0.1% overnight, with support lying at the recent three-week low of $0.71085 and resistance at $0.7149 and $0.7187.