AUD/USD Moves Downward after Rate Cut by RBA

AUD/USD – On 5/7 The Reserve Bank of Australia cut its base rate down 25 basis points to the 2.75% level.  While a downward move was expected, the AUD traders and the market had priced in a reduction of ½ that or 12 basis points.  The RBA’s 0.25% rate cut allowed the AUD/USD exchange rate to trade down from an average of 1.0235 to below an industry Short Term Target of 1.02.  A level of AUD/USD 1.018 was reached immediately after the announcement by the RBA Thursday 5/7.  After this the AUD rested at just below the Short Term Target of 1.02.  The Reserve Bank of Australia signaled that further reduction of interest rates could come in the future.  The RBA did this by leaving an indication that The RBA would be willing to use more of a “scope of further easing” in the future if AUD exchange rate continues to be excessive.

  • Short Term Target – The AUD/USD Short Term Target is 1.02
  • Six –Twelve Month Target – The AUD/USD Six to Twelve Month Target is Parity.
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