Australian dollar is heading much lower today, dropping across the board following a rate cut from the Reserve Bank of Australia. Concerns about economic growth are weighing on policymakers, and they feel that this is the best move they can make to help spur the economy forward.
Monday night the Reserve Bank of Australia said that it is cutting its benchmark rate from 2.50 per cent to 2.25 per cent. This still keeps the Aussie rate higher than many other developed nations’ rates, but it was a rate cut nonetheless, and it impacted the Aussie’s performance in Forex trading.
The Australian economy is growing at a slower pace than policymakers would like, and they are hoping that a rate cut can stimulate the economy. On top of that, the Aussie is seen as being higher than its fundamental value against a basket of currencies. With gold prices struggling, many think the Australian dollar should be lower than it is.
Aussie is likely to remain weak for some time, with concerns about gold prices, the strength of the greenback, and slowing economic growth in China.
At 11:20 GMT AUD/USD is down to 0.7675 from the open at 0.7806. AUD/NZD is down to 1.0644 from the open at 1.0680. AUD/JPY is down to 90.1180 from the open at 91.7110.
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