RBA Surprises the Market with Interest Rate Decision
Posted on 04. Mar, 2009 by admin in JPY Economic News, Japanese Yen, Japanese Yen Currency
The Australian Dollar has seen particularly heavy volatility due to major economic events in the Aussie economy the past two days. Yesterday the Reserve Bank of Australia (RBA) held its cash rate steady at 3.25%, taking the markets by surprise. Economists had forecasted a 25 basis point cut in the Aussie Interest Rate which the market had previously priced into the AUD pairs and crosses. Another surprise to the market was a significantly better than expected Current Account. This measure showed considerable strength in the Australian economy despite a recession-filled global economy.
These two market releases helped to boost the AUD/USD from 0.6292 to a high of 0.6463. However, losses in global equity markets reduced the demand for higher yielding currencies and helped to shed the pair’s gains. Early this morning, Australian GDP was released and the indicator came in significantly under the forecasted value. Economists had forecasted a contraction of 0.2% but the actual value released was a drop of 0.5%. This accelerated the selling of the AUD that began with U.S. equity losses. The pair is currently trading near the 0.6360 mark and may continue its descent for the near future.
