RBA cuts its interest rate
RBA lowered the key rate to 2% from 2.25%, as it was predicted by traders and economists. Governor Glenn Stevens said in a following statement that “the inflation outlook provided the opportunity for monetary policy to be eased further, so as to reinforce recent encouraging trends in household demand.”
Policy makers reiterated a warning that investment in industries outside mining, which were supposed to pick up slack in the economy, could fall. Stevens, in his statement, cited a better jobs market while noting a subdued contribution from the government.
As for exchange rates it was once again noted that “the Australian dollar has declined noticeably against a rising U.S. dollar over the past year, though less so against a basket of currencies,” Stevens said. “Further depreciation seems both likely and necessary, particularly given the significant declines in key commodity prices.”
Aussie was initially pushed lower, but found support slightly below 0.78 handle in order to bounce out and currently being traded few points above 0.79 handle. Pair is likely to find support around 0.7850 area and resistance above 0.7950 level. Later today, in the US session, Trade Balance and Non-Manufacturing PMI figures are scheduled for a release.
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