Aussie’s performance has been affected only slightly today after a Reserve Bank of Australia rate cut. Aussie is a recovering against the US dollar today, due mostly to general risk aversion, while the Down Under currency gains slightly against European currencies.
Most Forex traders were expecting a rate cut from the RBA, so today’s cut hasn’t come as a surprise. Some had expected a bigger rate cut, of 50 basis points, but many had expected the 25 basis point cut actually implemented. Now the RBA rate is 3.5%, down from 3.75%. However, even after the cut, Australia still has a higher rate than many other developed countries.
Aussie was slightly lower against the US dollar today, dropping on slight risk aversion, and concern over what’s next for the global economy. The RBA rate cut is just another acknowledgement of a difficult economic situation right now, and an attempt to head of problems if the eurozone situation should deteriorate further. However, Aussie is now gaining slightly.
As a result, against European currencies, the Aussie is higher. With the turmoil in Europe, it’s not much of a surprise that the euro is lower against the Aussie. Gold prices are also likely to help support the Aussie to some degree.
At 12:42 GMT AUD/USD is up slightly 0.9744 to from the open at 0.9728. AUD/EUR is up to 1.2773 from the open at 1.2843.
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