The Australian dollar fell as speculation of a scaling-down in US stimulus measures boosted the greenback.
At 7am AEST the local unit was trading at 94.86 US cents, down from 94.92 cents at yesterday’s local close.
With the US Federal Reserve starting its Federal Open Market Committee (FOMC) meeting, traders expect chairman Ben Bernanke to signal a dilution in the third round of bond buying, known as quantitative easing, or QE3.
HiFX currency strategist Alex Hill said this was boosting the greenback, and weakening the Australian dollar.
“If, all of a sudden, they're going to be reducing supply by not printing as much money ... you're taking more dollars, effectively, out of the system and it increases the value of that commodity,'' he said.
Mr Bernanke is scheduled to hold a news conference on Thursday morning AEST.
Traders are buying the greenback in anticipation of a policy change to adapt to a US economic recovery.
“The market is preparing for Bernanke to suggest again they're going to slowly start peeling back that bond buying program as circumstances let them,'' Mr Hill said.
Wall Street has rallied again, with the Dow Jones Industrial Average surging by 0.91 per cent, marking the sixth consecutive session where the index moved more than 100 points in a single session. The broad-based S&P 500 gained 0.78 per cent.
