AUD/USD consolidates gains after weak Fed outlook

NEW YORK (Forex News Now) – The Australian dollar consolidated earlier gains on Wednesday, hovering near a 2-month high, in the wake of a weaker economic forecast from the Federal Reserve.

In late U.S. currency trading, AUD/USD traded at 0.8842, up 0.08 percent on the day, after pulling back slightly from 0.887, the currency pair’s highest since May 14.

The Fed earlier lowered its projection for gross domestic product, the broadest measure of economic activity.

According to minutes from the Fed’s latest policy-setting meeting, the central bank projects that U.S. GDP will increase between 3 percent and 3.5 percent this year, down from the 3.2 percent to 3.7 percent forecast in April.

According to forex analysis, AUD/USD was likely to touch support around the low of July 9, 0.8727, and encounter immediate resistance around the daily high, 0.887.

FX traders, meanwhile, awaited the release of important economic data from Australia on inflation expectations and new auto sales.