Australian Dollar Higher Ahead Of Fed Decision

The Australian dollar climbed against its major counterparts on Wednesday, on hopes that the Federal Reserve will moderate the pace of tightening at the conclusion of its two-day policy meeting later in the day.

Markets expect a quarter-point rate hike by the Fed, to a 4.5 percent - 4.75 percent range.

Overnight data showing a drop in labor costs cemented expectations for a smaller 25 basis-point hike by the central bank.

China manufacturing activity improved in January, further underpinning the risk sentiment.

While the official manufacturing PMI moved to expansion from a 34-month low in the previous month, the Caixin survey showed that factory activity shrank more slowly than in the previous month.

The aussie rose to 2-day highs of 0.7082 against the greenback and 92.24 against the yen, off its early lows of 0.7037 and 91.49, respectively. The aussie may test resistance around 0.72 against the greenback and 94.00 against the yen.

The aussie edged up to 1.5358 against the euro, after falling to 1.5424 in early deals. The aussie is seen finding resistance around the 1.49 mark.

The aussie advanced to 0.9420 against the loonie, from an 8-day low of 0.9372 hit at 9:30 pm ET. On the upside, 0.96 is possibly seen as its next resistance level.

The aussie was up against the kiwi, at a 6-day high of 1.0985. If the aussie rises further, it may find resistance around the 1.12 level.

Looking ahead, Eurozone CPI for January and jobless rate for December are due in the European session.

U.S. ADP private payrolls data for January is scheduled for release at 8:15 am ET.

U.S. ISM manufacturing PMI for January and construction spending for December are set for release in the New York session.