The Australian dollar depreciated against its key counterparts in the Asian session on Wednesday, as risk sentiment dampened on inflation fears due to elevated oil prices and a looming reduction in Federal Reserve bond purchases.

Three Fed officials including Vice Chair Richard Clarida said overnight that the U.S. economy is showing substantial improvement to begin the withdrawal of the QE program.

Investors awaited a report on U.S. consumer price inflation as well as the minutes of the latest Federal Reserve meeting for more clues on the policy outlook.

The International Monetary Fund slashed its global growth forecast for this year as the chips shortage and energy crunch continue to pose downside risks to recovery.

Australia's coronavirus situation also continues to be a concern, particularly in New South Wales and Victoria, as it is hindering economic activity. Victoria reported 1,571 new cases of COVID-19 and thirteen deaths on Tuesday, with 19,861 total active cases across Victoria. NSW recorded 444 new local cases and four deaths.

The aussie fell to 2-day lows of 0.7330 against the greenback, 0.9131 against the loonie and 1.0565 against the kiwi, off its prior highs of 0.7352, 0.9165 and 1.0609, respectively. The aussie is poised to find support around 0.70 against the greenback, 0.90 against the loonie and 1.03 against the kiwi.

The aussie dropped to 83.12 against the yen and 1.5751 against the euro, from its early highs of 83.53 and 1.5674, respectively. The aussie is seen finding support around 80.00 against the yen and 1.59 against the euro.

Looking ahead, Eurozone industrial production for August will be out in the European session.

U.S. inflation data for September is due in the New York session.

The Fed minutes from the September 21-22 meeting are set for release at 2:00 pm ET.

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