The Australian dollar demonstrated a surprising resilience after the interest rate cut from the Reserve Bank of Australia and poor economic data. While the currency dipped initially, the drop was quickly followed by a strong bounce.
The RBA cut its cash rate by 25 basis points to 1.5%. Most market participants were counting on such a decision even though unexpectedly strong inflation had caused some doubts about willingness of the central bank to ease its monetary policy.
Meanwhile, Australian economic reports released over the current trading session were discouraging. Building permits fell in June instead of rising as analysts had predicted, and the trade balance deficit widened (on a seasonally adjusted basis) instead of shrinking.
Yet how the Aussie has reacted to the extremely poor news? It rallied against the US dollar and the euro!
AUD/USD rallied from 0.7534 to 0.7607 as of 14:49 GMT today after falling to 0.7487 intraday. EUR/AUD dropped from 1.4809 to 1.4739 following the rally to 1.4898. AUD/JPY fell a little from 77.14 to 76.84.
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