At 1200 AEDT on Thursday, the local unit was trading at 88.58 US cents - its lowest point since August 2010 - down from 89.04 cents on Wednesday.
The Australian dollar fell as low as 88.21 US cents after the Fed announced it would reduce its bond purchases by $US10 billion a month to $US75 billion from January.
"This morning's news marking the beginning of the end of one tool of monetary stimulus, came comfortingly wrapped in the cotton wool of commitment to another, in the form of low interest rates," CMC Markets sales trader Niall King said.
"With an increased amount of certainty about how the Fed plans to approach the reduction in bond purchases, focus will now turn to the speed at which the program will be brought to an end."
The impact on the dollar was likely to please the Reserve Bank of Australia, and many businesses, he said.
"The move by US policy makers has sent the Aussie sailing towards levels where the RBA would be more comfortable, the perceived calmer waters for the domestic economy around US 85 cents," Mr King said.
Meanwhile, Australian bond futures prices were lower.
At 1200 AEDT on Thursday, the March 10-year bond futures contract was trading at 95.785 (implying a yield of 4.215 per cent), down from 95.815 (4.185 per cent) on Wednesday.
The March three-year bond futures contract was at 97.010 (2.990 per cent), down from 97.050 (2.950 per cent).
