The Australian dollar is trading higher today after a slightly dovish stance from the US Federal Reserve at their latest FOMC meeting.

At 7.13pm (GMT), the Aussie dollar was trading at US71.95c up from US71.10c in yesterday’s trade.

Although most economists agree that the Fed will raise rates in December the tone of the meeting suggested that any further rate rises would be gradual and slow coming, which sent the US dollar weaker across the board against the major currencies, including the Aussie dollar.

The local currency bounced back well from below US71c, considering the fall in commodity prices which included iron ore, Australia’s biggest export.

Although the Australian dollar rallied, the party is expected to be short lived as fears over more falls in the iron ore price as well as a further slowdown in China,  is expected to put pressure on the Reserve Bank of Australia to cut rates in the nearest future.

Any rate cut by the RBA would wipe out any benefit of a Gradual increase in rates from the US Federal reserve.