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A surge in the dollar points to a soft start to Australian share trade after the US Federal Reserve left its key rate on hold.

ASX SPI200 index futures declined 26 points or 0.4 per cent to 6725 as the dollar jumped more than a cent. The Aussie rose 1.1 cents to 68.82 US cents, its highest level in a month. A strengthening dollar is a plus for importers and online shoppers, but viewed by international investors as negative for Australia’s largely export-driven economy.

The slump in our futures flew in the face of solid gains in the US after the Fed signalled it expects a strong jobs market and solid inflation to grow the economy. The S&P 500 advanced nine points or 0.29 per cent, with most of its gains following the Fed’s monetary policy statement. The Nasdaq added 38 points or 0.44 per cent. The Dow was held back by a poorly-received outlook from Home Depot, edging up 30 points or 0.11 per cent.

The Fed left its benchmark rate at a target range of 1.5 – 1.75 per cent, as expected, and signalled no change through next year. The central bank’s so-called “dot-plot” indicated a majority of committee members do not expect to raise the target range until 2021, and then only once.

“The Committee judges that the current stance of monetary policy is appropriate to support sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 per cent objective,” the committee said in a policy statement.

The statement suggested the Fed intends to stand aside during what is expected to be a heated election year. President Donald Trump has been a fierce critic of the central bank’s stance on rates, accusing officials of hampering American growth and attacking Chair Jerome Powell as an “enemy” of America.  

The last central bank policy meeting of the year distracted from trade concerns as another US session passed without news on the $US156 billion worth of tariffs due to come into effect on Sunday. Conflicting reports on Tuesday suggested a delay is the most likely outcome, with both sides playing brinkmanship as the deadline approaches.     

The ASX 200 began slowly yesterday, but gathered pace to end the session 46 points or 0.7 per cent ahead at its strongest level in a week. The index has risen for four out of the last five sessions.

The big two iron ore miners helped drive yesterday’s gains as ore reversed Tuesday’s losses. The spot price at Tianjin rallied $1.20 or 1.3 per cent to $US94.35 a dry ton. Overnight, BHP’s US-listed stock gained 1.22 per cent and its UK-listed stock 1.08 per cent. Rio Tinto added 1.5 per cent in the US and 1.44 per cent in the UK.

Gold extended gains after the Fed news, rising on a steady rate outlook. February gold settled $6.90 or 0.5 per cent ahead at $US1,475 an ounce and had lately risen to $US1,479.30.

Oil was kneecapped by an unexpected rise in US supplies. Brent crude slumped 62 cents or 1 per cent to $US63.72 a barrel after the US Energy Information Administration reported crude inventories increased by 800,000 barrels last week, against expectations for a fall of 2.8 million barrels.    

Copper crawled to its highest level in almost five months amid hopes for a trade breakthrough. Benchmark copper traded 0.1 per cent ahead in official rings at the London Metal Exchange at $US6.108 a tonne. Aluminium added 0.2 per cent and lead 0.5 per cent. Nickel was bid down 1.7 per cent, tin 0.1 per cent and zinc 0.2 per cent.

A low-key session ahead for scheduled economic news. The consumer inflation expectations survey is due at 11 am EST, and the quarterly RBA Bulletin half an hour later. The European Central Bank meets tonight. Inflation figures are the big-ticket item tonight in the US.

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