Australian dollar notches another high for the year but stalls at resistance

By Stella Qiu

SYDNEY, Sept 17 (Reuters) - The Australian dollar eked out its sixth-straight high for the year on Wednesday but stalled at key chart resistance before the Federal Reserve meeting where markets are betting on a rate cut and expect policymakers to signal more easing in coming months.

The Aussie slipped 0.1% to $0.6679 AUD=D3, having earlier edged up to a fresh 11-month top of $0.6690. However, it hasn't been able to make a firm break above the key chart level of $0.6687, with the next leg higher largely dependent on the outcome of the Fed meeting later in the day.

The Fed is widely expected to cut its benchmark overnight interest rate by a quarter point but the real interest lies in how many policymakers will shift to the dovish side, with Stephen Miran, appointed by President Donald Trump, joining the board for deliberations.

Analysts at the Commonwealth Bank of Australia expect the Aussie to easily lift through 67 cents if Fed Chair Jerome Powell sounds dovish at his post-meeting press conference.

"The market reaction on Thursday will depend on whether Powell is 'dovish enough'," said Kristina Clifton, an economist at CBA.

"We expect a 25-bp cut and dovish comments by chair Powell... If the FOMC cuts by 50-bp, the USD would fall significantly."

Overnight, the U.S. dollar fell to a four-year low on the euro as investors bet on a whole series of rate cuts from the Fed. The Japanese yen also climbed to a one-year peak.

That saw the Australian dollar losing some of its recent shine against the euro EURAUD=R and yen AUDJPY=R, dropping 0.6% and 0.4% respectively overnight.

The kiwi dollar eased 0.2% to $0.5980 <NZD=D3>, having climbed 0.3% overnight to scale a one-month peak of $0.5992. It faces major resistance at $0.5997.

Data on Wednesday showed sizeable historical revisions to New Zealand's current account data. Second-quarter current account deficit stood at just NZ$970 million, much lower than the forecast NZ$2.66 billion.

"Most of that revision reflects an increase in estimated investment income credits – the return on New Zealander’s holdings of foreign assets," said Darren Gibbs, a senior economist at Westpac NZ.

"The credit ratings agencies should welcome news that the deficit is now less than half as wide as the peak seen in 2022, and not much wider than it was leading into the pandemic."