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Forex - AUD/USD edges higher after China trade data, Fed

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Forexpros - The Australian dollar edged higher against its U.S. counterpart on Wednesday, climbing to a two-day high after better-than-expected Chinese trade data, while a pledge by the Federal Reserve to keep rates at ultra-low levels weighed on the greenback.

AUD/USD hit 1.0414 during late Asian trade, the highest since August 8; the pair subsequently consolidated at 1.0375, gaining 0.21%.

The pair was likely to find support at 0.9925, Tuesday's low and a five-month low and resistance at 1.0526, the high of August 5.

Earlier in the day, official data showed that China's trade surplus widened to USD31.5 billion in July, the highest level in more than two years. Analysts had expected China's trade surplus to widen to USD27.4 billion.

The report showed that Chinese imports rose 22.9% to USD143.6 billion, while exports climbed 20.4% to a record high USD175.1 billion. China is Australia's largest export destination.

Meanwhile, the Federal Reserve pledged on Tuesday to keep its benchmark interest rate at an all-time low, adding that it will maintain a loose monetary policy until "at least through mid-2013."

In a statement, the Fed said growth was much slower than expected and the labor market had deteriorated, underlining concerns over the U.S. economic outlook.

The Fed also indicated that it "discussed the range of policy tools available to promote a strong economic outlook recovery in a context of price stability" and said it was prepared to employ the tools "as appropriate".

Elsewhere, the Aussie was lower against the yen, with AUD/JPY slipping 0.12% to hit 79.62.

Also Wednesday, a report showed that Australian consumer confidence fell for the fourth consecutive month in August amid a combination of concerns over the global economic outlook and the impact of a strong Australian dollar.

Westpac Bank said Australia's sentiment index dropped 3.5% to 89.6 in August from a month earlier, the lowest since May 2009.

Later in the day, the U.S. was to produce data on the federal budget balance as well as reports on crude oil stockpiles and wholesale inventories.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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