$A drops one US cent after Fed minutes
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SYDNEY, Feb 21 AAP
February 21 2013, 07:42AM
The Australian dollar has fallen more than one US cent as it looks likely there could be an early end to the US Federal Reserve's stimulus program.
At 0700 AEDT on Thursday, the local unit was trading at 102.44 US cents, down from 103.65 cents on Wednesday.
The currency reached an overnight low of 102.43, its weakest level since Tuesday of last week.
The minutes of the Fed's January policy meeting show that some members were worried that the bond-buying programs could eventually escalate inflation and unsettle financial markets.
BK Asset Management managing director Kathy Lien said the US dollar rallied against all the major currencies after the remarks were released.
"The real reason (the Fed) is considering an end to the program is because they see a significant improvement in the labour market," she said from New York.
Ms Lien also said the Australian dollar was one of the hardest hit because the Reserve Bank of Australia's (RBA) monetary policy stance was in stark contrast to what the US Federal Reserve was now considering.
"Australia is looking at the possibility of cutting the interest rate next month and the US is looking at the possibility of unwinding some of this emergency stimulus," she said.
On Friday, RBA governor Glenn Stevens will appear before the House of Representatives committee.
Ms Lien said the testimony has become more important after the release of the US central bank's January minutes.
"The Aussie dollar has fallen quite a bit, much more than the euro, the yen or the Canadian dollar," she said.
"The reason for that is because the RBA is looking at the possibility of easing.
"If the governor confirms this, that would compound the losses and could take the Aussie dollar to a level below 102.00 US cents."
Ms Lien said she expected the Australian dollar to trade in a range between 101.75 US cents and 102.75 cents on Thursday.