The Australian dollar took a hit in trading late yesterday after the US Federal Reserve gave a clear signal that it was prepared to lift interest rates in its December meeting.

Although rates were kept on hold yesterday, the Fed mentioned that weak global growth, especially from China was no longer a concern in the decision process.

They also noted that as long as the job market remains strong and inflation moves towards the preferred target of 2 percent they are on track to raise rates in September.

Immediately after the announcement the Aussie dollar plunged over US1c from around US72c to just below US71c.

It was a double whammy for the local currency after weak CPI numbers from Australia earlier in the day also took its toll.

 The Aussie dollar now faces the dilemma of a rate cut by the Reserve Bank of Australia and a reduction by the US Federal Reserve.

If this scenario plays out the figure that most analysts are predicting for the Australian dollar is a number of around US65c by the end of the year with a figure of US 60c not out of the question early next year, especially if commodity prices like Iron ore keep tumbling.

The pending home sales figure from the US later today may show more strength in the US economy which may see the Aussie dollar fall further.