Aussie Drops as RBA Reduces Main Interest Rate

The Australian dollar weakened today after the Reserve Bank of Australia cut its key interest rate as the unfavorable developments in the global economy justified easing of the monetary policy.
The RBA cut its cash rate by 25 basis points to 4.25 percent today. RBA Governor Glenn Stevens said in the statement that “the inflation outlook afforded scope for a modest reduction in the cash rate”. The decision hasn’t surprised Forex market participants, but the reaction of the Australian currency was a bit surprising as analysts thought that the rate reduction was priced in. Perhaps they were right after all as the Aussie tries to rebound after the initial slump.
AUD/USD traded near 1.0222 as of 15:34 GMT, following the earlier slump from 1.0267 to 1.0157 — the lowest level since November 30. AUD/JPY was at 79.53 after tumbling from 79.89 to 78.91.

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