The drop of Australian Interest Rates Down to a Record low, Supported the AUD / USD tumbling to a record low, as the pair retreated to the 0.6671 support level, the lowest since March 2009, before settling around 0.6710 at the time of writing. To support its recent losses, the Reserve Bank of Australia cut its monetary interest rate to a record low, reflecting lower inflation and rising unemployment. The RBA board, governed by Philip Lowe, has decided to cut rates by 25 basis points to 0.75 per cent. The decision was in line with expectations.
The Board of Directors has decided to cut interest rates to support employment and income growth and provide greater confidence that inflation will be consistent with the Bank's medium-term objective. The bank noted that the economy still has spare capacity, and that lower interest rates will help make progress.
"It makes sense to expect a long period of low interest rates in Australia to reach full employment capacity and achieve the inflation target," the bank said in a statement. "The board will continue to monitor the developments, including the labor market, and is ready to further ease monetary policy if needed. This is to support the sustainability of economic growth, full employment and the achievement of the inflation target over time. ” The continuation of the fierce trade war between the United States and China has a fundamental and direct impact on the Australian economy as China is Australia's largest trading partner.
Previously, IHS Markit survey results showed that Australia's manufacturing sector grew at a slower pace in September. Manufacturing PMI fell to 50.3 in September from 50.9 in August.
From a technical perspective: on the daily chart, the general trend of AUD / USD remains stronger, and this trend will remain as long as it remains below the 0.7000 psychological resistance. The current pessimism that the two sides in the global trade war - the United States and China - will not conclude a comprehensive trade agreement that will resolve the dispute, which threatens the future of global economic growth, will remain a negative factor for the Australian dollar as a risk currency. The closest support levels for the pair may currently be 0.6670, 0.6600 and 0.6535 respectively.