AUD falls in forex trading as Australia cuts interest rate to 7.00%. | CountingPips Forex Blog

September 2 , 2008 - Forex Economic News

AUD falls in forex trading as Australia cuts interest rate to 7.00%.

The Reserve Bank of Australia lowered its official cash lending rate by a quarter of a percent today to 7.00 percent amid an economic slowdown and helped push the Australian Dollar lower in forex trading. Today's interest rate cut was widely expected by market forecasts and marks the first RBA rate deduction since 2001 as the Australian economy experiences a slowdown with declines in household spending, production and business activity. Australia has also been battling a high rate of inflation at 4.5 percent which had prompted four interest AUD falls in Foreign Exchange Trading today. rate increases in the past year with the last coming in February and March. The RBA's inflation target range is 2-3 percent.

Glenn Stevens, RBA Governor of Monetary Policy, stated in the report that, "Given the opposing forces at work, considerable uncertainty has surrounded the outlook for demand and inflation. On balance, however, it is looking more likely that household demand will remain subdued and overall economic growth slow over the period ahead. Inflation is likely to remain relatively high in the short term, with the CPI affected by the high global oil prices in mid year and other increases in raw materials prices. But looking further ahead, the outlook for demand suggests that inflation in both CPI and underlying terms is likely to decline over time, provided wages growth remains contained. The Bank’s forecast remains that inflation will fall below 3 per cent during 2010."

Australian dollar declines in Forex Trading.

The Australian dollar has been losing ground today in the forex market against most of the major currencies after the interest rate news. The Australian dollar has declined verses the U.S. dollar to 0.8372 AUD per USD in the US afternoon from the open of the day at 0.8489. The Aussie has declined five out of the last six weeks verses the American currency and is trading at its lowest level since August 2007. The Aussie dollar has also declined today verses the Japanese yen to 90.98, the European euro to 1.7317 and the New Zealand dollar to 1.2195.

AUD/USD Chart - The Australian dollar has declined five out of the last six weeks verses the U.S. dollar(Daily Chart).

Forex Chart

tags: aud, interest rate, rba, forex trading

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