Australian, New Zealand Dollars forecasted higher as risk-takers are predicted to take this rally further

The Australian and New Zealand dollars are well ahead on the currency markets on Thursday:

• The British pound to Australian dollar rate is 0.3 pct down on last night's close at 1.6915.
• The British pound to New Zealand dollar exchange rate is 0.94 pct lower at 1.9114.

[Keep in Mind: The above quotes are taken from the wholesale markets, your bank will subtract their own spread when passing on a retail rate. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering more currency. Please learn more here.]
In case you missed it, the US Federal Reserve decision means monetary policy in the US will remain very accommodative, more so than had been priced in by markets.

US Treasuries rallied by over 15bps at the long end of the curve, US equities rose around 1% and the US dollar fell.

"As a result, the AUD was trading up nearly 2 cents around USD0.95 at the time of writing. The course of the AUD is important for the future path of the Australian cash rate and this large move higher in the exchange rate if sustained will likely see markets price an increased chance of further easing," says a note from ANZ Research.

Risk seekers predicted to boost AUD and NZD

Emmanuel Ng at OCBC Bank says he is forecasting this pro Australian / New Zealand dollar theme to persist:

"Going ahead, the Fed’s inaction may continue to engender risk seeking behavior across asset markets in the short term.

"With the promise of excess liquidity for just a little longer, expect cyclical/growth currencies (AUD, NZD, NZD) to potentially lead the way higher against the greenback."

Note also that emerging market risk premiums are on the cusp of compressing below a threshold typically associated with risk-taking behaviour in Asia, and USD-Asia would be expected to probe the downside.

"Hitherto positioning may also suggest that the likes of the INR, IDR, and MYR would also attempt to make up lost ground given their recent under performance," says Ng.

Australian Dollar forecast: Higher

OCBC Bank say they are forecasting the Australian Dollar, and by proxy the NZ Dollar, to rally:

"Our tactical long AUD-USD recommendation from 09 Sep 13 has met its 0.9525 target (original spot ref: 0.9212) for an implied +3.40% gain (excl carry). Our next objective is now set at 0.9850, with the stop also trailed to 0.9360."

Geoffrey Yu at UBS is also bullish on the Australian currency:

"Having closed above the important resistance at 0.9510, there is scope for more upside to 0.9715. Support is at 0.9336."

US Dollar weaker for longer

Yu says that it is the position held at UBS that the US Dollar is unlikely to see a recovery in 2013:

"Yesterday's FOMC outcome will keep the dollar weak until the end of the year. Dollar downside may be limited by risk-aversion in October owing to US fiscal risks and by other central banks responding by either cutting interest
rates – the European Central Bank or the Reserve Bank of Australia for example – or talking dovishly to stop their currencies rising against the dollar.

"But only when the Fed feels more confident to start tapering will the dollar start to recover in the new year."