Forex Marketz Daily Forex News – Fully Markets Update
Just a short time ago, Reserve Bank of Australia shocked financial markets, especially the Forex market, when the cut their prime lending rate 25 basis points from 2.50 percent to 2.25 percent. Economists, including myself, were expecting the RBA to make no changes to monetary policy or any rate cut at this time. This change in monetary policy is the first move for the RBA since the last time they made a rate adjustment on August 7, 2013. After the move the AUD/USD plummeted nearly 1.9 percent to 0.7651, at the time of this report. The AUD/USD is trading sideways as investors digest the losses and news. See the below 5 minute MT 4 chart.
We had expected no change thanks to somewhat improving economic data coming out of Australia over the last couple of months. However, the RBA decided to make a move anyway. The bank cited the need to achieve a more “balanced” rate of growth in their economy. There has been some negative sentiment regarding domestic demand, output growth as well as a sticky unemployment rate in Australia. The monetary policy board also has not been happy with the price level of the Australian Dollar, as they felt the price was above their target level.
After the rate cut, the after statement by the RBA was very dovish. Thanks to these remarks, there is a strong likelihood of another rate cut at their next monetary policy meeting.
