The AUD/USD Currency Pair Declines Before Bouncing After RBA Commentary

on Sep 18, 2012
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FXstreet.com reported on September 18 that the AUD/USD pair declined through early European trading only to find support at 1.042 following a commentary by the Reserve Bank of Australia (RBA).

The downward movement of the pair is attributed to a commentary by the Swiss Government which lowered their economic forecast for 2012 and 2013. This in turn led to some negative risk sentiment and caused the AUD/USD currency pair to decline. The pair, however, found support at 1.042.
Bloomberg reports that the RBA minutes of its September 4 meeting released today showed that the bank identified the strength of the Aussie and the slowing growth in China as risks to the domestic economy, signaling scope to cut interest rates if needed. The RBA board lowered the cash rate by a total of 1.25 percentage points from November to June with the purpose of shielding the Australian economy from the Eurozone debt crisis and the slowdown in China’s economic growth. Nevertheless, at 3.5 percent, the benchmark borrowing cost is still the highest among major developed economies, prompting investors to speculate that the benchmark rate will be reduced.
Bloomberg reports that the Australian dollar has gained 2.5 percent in 2012 and has closed above parity with the greenback for all but 23 days this year.

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