Investing.com - The Australian dollar slipped lower against the U.S. dollar on Thursday, extending losses into a second session after the Federal Reserve scaled back stimulus, while concerns over emerging markets and weak Chinese manufacturing data also weighed.
AUD/USD hit 0.8711, the lowest since Monday, and was last down 0.11% to 0.8729, not far from the three-and-a-half year lows of 0.8659 reached late last week.
The pair was likely to find support at 0.8676, Monday’s low and resistance at 0.8825, Wednesday’s high.
The Federal Reserve rolled back its bond purchasing program by another $10 billion to $65 billion-per-month at its policy meeting on Wednesday, in a widely anticipated decision.
The Fed said growth signals are encouraging, and the unemployment market shows improvement "on balance".
Fears over emerging markets continued to weigh on risk appetite after rate hikes by central banks in Turkey and South Africa failed to prop up their currencies. Emerging market economies are vulnerable to reductions in Fed stimulus, as they rely on foreign investment to plug their current account gaps.
Market sentiment was also hit be renewed fears over a slowdown in China after revised data on Thursday showed that China’s HSBC manufacturing index ticked down to a six-month low of 49.5 this month, below the preliminary estimate for 49.6.
China is Australia’s largest trading partner.
The Aussie was higher against the New Zealand dollar, with AUD/NZD last up 0.62% to 1.0704 after the Reserve Bank of New Zealand left rates on hold on Wednesday, disappointing some market expectations for a rate hike.
The RBNZ left the cash rate unchanged at a record low of 2.5%, but said the country’s "economic expansion has considerable momentum" and added that a return of interest rates to more normal levels can be expected "soon."