World interest rates look like staying low after the US Federal Reserve decided to keep rates steady and indicated the path to raising rates would be slower than previously expected.
The Australian dollar has been given a boost by the decision and local share markets also reacted positively.
The central bank chair Janet Yellen flagged that US economic activity had been expanding at a moderate pace, and said recent indicators pointed to a strengthening labour market.
However, it said the US continues to face risks from an uncertain global economy.
“The statement also gave a sense of a more dovish tone,” said Rodrigo Catril, a currency strategist at NAB.
“Previous comments in relation to balance of risks to the outlook were dropped and instead a new sentence was added noting that ‘global economic and financial developments continue to pose risks.'”
The Australian dollar soared to touch a high of 75.6 US cents on the news, it was still trading 1.1 per cent higher at 75.4 US cents in morning trade. The Australian share market also took heart at the US rate decision, with the S&P/ ASX index up 0.8 per cent or 41.1 points to 5153.8 in early trade.
The Australian dollar also rose against most major currencies, buying 84.8 Japanese yen, 53 British pence, 67.3 euro cents and $1.123 New Zealand.
In New York, the Dow Jones Industrial Average finished off the day’s highs, adding 0.4 per cent to 17,326.
The Nasdaq gained 0.8 per cent to 4,764, while the S&P 500 climbed 0.6 per cent to 2,027.
Overnight, in London, the FTSE 100 rose 0.6 per cent to 6,175, the German DAX added 0.5 per cent to 9,983, while France’s CAC 40 slipped 0.2 per cent to 4,463.
Locally, shares are set to follow overseas markets higher, with the ASX SPI 200 adding 0.7 per cent to 5,162.
On commodities markets, oil prices jumped 4 per cent after major oil producers looked more likely to discuss an output freeze.
West Texas crude soared 5.8 per cent to $US38.46 a barrel.
Spot gold jumped 2.5 per cent to $US1,263 an ounce.