The Australian dollar edged slightly higher in a calm market before  the storm blowing in from the US Federal Reserve meeting, which starts early Thursday Australian time.
In late local trade on Wednesday the Australian dollar  was buying US71.44&cent;, compared with US71.13&cent; at the same time on Tuesday.
The currency had dipped to a low of US70.85&cent; just after midnight Australian  time before a rally on Wall Street after  strong US retail data drove up risk appetite and inspired Australian buying, Commonwealth Bank of Australia senior currency trader Elias Haddad said. 
The Australian  currency reached as high as US71.56&cent; in early trade and, with few important local drivers, remained steady during the day. 
"It is the calm before the storm before Friday morning's FOMC [Federal Open Markets Committee] meeting," Mr Haddad said. 
A speech by Reserve Bank of Australia assistant governor financial markets Guy Debelle on Wednesday morning did little to shake the Aussie from its perch. 
Mr Debelle said markets should not be surprised by a rate hike in the US, because  it was the "most well-telegraphed rate rise" in history.

In agreement
Foreign exchange traders appeared to be in agreement, OANDA Australia and Asia Pacific senior trader Stephen Innes said. 
While the market was predicting less than a one-in-three chance of a hike in   September,  "with pre-FOMC positions, squaring is the name of the game", he said.
In any case, the Australian dollar is likely to drop again when the Federal Reserve does begin its tightening cycle, although this will be offset by any further improvement in commodity prices and fading fears about China's equity markets and  economic conditions.
Bristish-based Capital Economics, one of the foremost bears on the Australian economy, still expects the Aussie to decline as far as US60&cent;, as weak commodity prices continue to dent mining investment. Other sectors of the economy would be insufficiently robust to compensate for this ongoing downturn, chief Australia and New Zealand economist Paul Dales said.
"The weaker exchange rates are cushioning the blow from the plunge in export prices, but they won't outweigh the drag on overall gross domestic product growth," he wrote on Wednesday.
"With the boost to inflation from the weaker currencies also likely to be smaller than in the past, the combination of weak growth and low inflation will result in interest rates in both Australia and New Zealand being cut by more than the markets expect, to 1.5 per cent and 2 per cent respectively."
 Across the ditch on Wednesday, the New Zealand dollar enjoyed a strong rally on dairy prices. 

Hopes for a resurgence 
The kiwi was given a 1.3 per cent boost after average winning prices in the GlobalDairyTrade auction rose 16.5 per cent to $US2568 a tonne, spurring hopes for a resurgence in dairy prices, which have languished because of  lower demand, particularly from China. 
The rally took the kiwi from US62.92&cent; to as high as US63.11&cent;.
"However, I would not get too excited, given the fact global demand is not expected to swing higher any time soon," Mr Innes said.
Mr Haddad said he expected the Australian dollar to trade sideways until the outcome of the Federal Reserve decided at its meeting  whether  to  lift interest rates for the first time since 2006.
"The caveat to that though is if we have some significant pullbacks in Chinese stocks again, but the major focus is on the US," he said.