AUD/USD's Reaction to RBA's 25 bps Rate Cut (10/2/2012)

I haven't covered the Australian Dollar in a while, mainly because it's been in a tight range since the beginning of 2011. But, AUD/USD might start to get interesting again as it trades closer to the apex point of a multi-year symmetrical triangle. After the Reserve Bank of Australia cut its cash rate by 25 basis points to 3.25%, AUD/USD fell 0.63% to 1.03. Read the RBA's statement here.

Source: FreeStockCharts.com

These are selected quotations from the RBA's statement.

"Statement by Glenn Stevens, Governor: Monetary Policy Decision

At its meeting today, the Board decided to lower the cash rate by 25 basis points to 3.25 per cent, effective 3 October 2012.

The outlook for growth in the world economy has softened over recent months, with estimates for global GDP being edged down, and risks to the outlook still seen to be on the downside. Economic activity in Europe is contracting, while growth in the United States remains modest. Growth in China has also slowed, and uncertainty about near-term prospects is greater than it was some months ago. Around Asia generally, growth is being dampened by the more moderate Chinese expansion and the weakness in Europe.

Key commodity prices for Australia remain significantly lower than earlier in the year, even though some have regained some ground in recent weeks. The terms of trade have declined by over 10 per cent since the peak last year and will probably decline further, though they are likely to remain historically high..."

"At today's meeting, the Board judged that, on the back of international developments, the growth outlook for next year looked a little weaker, while inflation was expected to be consistent with the target. The Board therefore decided that it was appropriate for the stance of monetary policy to be a little more accommodative."

Update: Track AUD/USD live at the Market Center.

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