The Australian Dollar fell sharply today after the Reserve Bank of Australia (RBA) announced an interest rate cut of 25bps. The announcement brought rates to 2.75%--its lowest ever since the RBA began setting monetary policy.
In his statement, RBA Governor Glenn Stevens pointed out the low inflation rate as a primary motivator for the rate cut. "The Board has previously noted that the inflation outlook would afford scope to ease further, should that be necessary to support demand. At today's meeting the Board decided to use some of that scope. It judged that a further decline in the cash rate was appropriate to encourage sustainable growth in the economy, consistent with achieving the inflation target."
A further 25bps cut is expected later this year, which would bring down the rate to 2.5%.
Prior to the announcement, the AUD/USD pair was trading at around 1.025. It plummeted to below 1.019 after that, although it is quickly making its way up a little below 1.020 as of writing.
Initial resistance is seen at 1.0283, while support is at 1.0190.
100.00 Evades USD/JPY
Meanwhile, the 100.00 level continues to escape the USD/JPY pair. While it has reached the 99.4 mark yesterday, it has since fallen to 98.84, and is currently hovering around 99.07.
The pair fell initially today after Japanese Financial Minister Aso said that it would take a few months before the effect of the BoJ easing would be seen.
Initial resistance for the pair is at 99.61, while support is at 99.19.
EUR/USD Recovers
The EUR/USD pair is climbing to around 1.309 after it fell sharply yesterday after Mario Draghi's comments. The European Central Bank's (EBC) President said yesterday that the ECB is prepared to cut rates further if needed. Prior to the announcement, the pair was hovering around 1.310-1.311, but has dropped severely to below 1.306.
However, with little news relevant to either currencies, only little movement is expected to be seen from the pair.
Initial resistance is seen at 1.3109, while initial support is seen at 1.3020.
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