The recent weakening of the Australian Dollar was caused by the RBA’s decision to cut the key interest rate by 0.25% down to 3.25%. Despite the fact that analysts hadn’t expected such an outcome, they say the cut was taken into account by the swap market.
There were several reasons for the rating cut. However, the main one is the intension to curb the strengthening of the national currency in order to support Australian exporters and to resist lower commodity prices. It should be noted that the interest rate cut became possible due to moderate inflation.
Speaking about the RBA’s future monetary policy, the experts of RBC Capital Markets say that the latest cut shouldn’t have shocked the market. The decision was a natural outcome. It’s a part of the current economic stimulation plan.
The experts of Nomura assume that the RBA will implement further interest rate cuts in late 2012. The key rate is expected to drop down to 30%.
Forex.
According to , the Aussie keeps weakening against the US Dollar. The uptrend represented by А/В of Weekly2 is nearly completed. The experts report that AUDUSD is forming a downswing represented by wave А/В of level Daily.
The closest major levels of support are 1.0234/12 and 1.0166. The current bearish move will be completed as soon as the price overcomes the top of the MF sloping channel and consolidates above 1.0402. (as shown below).
