This morning the RBA chose to cut the Interest rates by 0.25% to 1.75%. The recent strength in the Aussie coupled with poor Consumer Price Index data last week forced the hand of the Reserve Bank.
There was a belief that the drop we saw at the end of last week was the pricing in of the cut as it was a 50/50 if the RBA would make the decision. The AUD this morning has already lost significant ground against Sterling breaking the 1.94 barrier.
There is also an expectation that this will not just be one rate cut and that there could well be a further cut soon. Furthermore it’s worth pointing out that the interest rate at 1.75% is a historic low for Australia, so any further cuts would be record breaking.
If you are looking to purchase Australian Dollars the rate cut was exactly what was needed in order for the rate to move significantly in your favour.
I would not be surprised to see the Aussie regain some of the lost ground and return to the 1.90 mark by next week especially as commodity markets are still strong and the USD is not showing any strength. Make sure you are in contact with your broker so that you are able to capitalise on the 3.3% gain since this time last week.
Thursday brings a busy day for the AUD with New Home Sales and Retail Sales expected to be up. The Trade balance figures are also expected to show an improvement of £0.5bn. Then on Friday there will be a RBA Monetary policy Statement which should give an indication of the committee’s thoughts moving forwards.
The RBA rate decision coupled with poorer than expected Consumer Price Index data has created the perfect opportunity to buy AUD. Speak to one of our Brokers today to ensure you get the best rate whilst the opportunity is there. Call our trading floor on 01494 725 353 or email me here.
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