AUD at three-week low following surprise rate cut by RBA

<p>The biggest mover overnight was the AUD, following a surprise rate cut of 25 basis points to 3.25%. The short term rate was expected to […]</p>

The biggest mover overnight was the AUD, following a surprise rate cut of 25 basis points to 3.25%. The short term rate was expected to remain unchanged at 3.50%. The Australian dollar dropped against all of its 16 major peers and to 1.0293, its lowest level in over three weeks against the US dollar. The euro and cable traded modest ranges overnight at 1.2875 / 1.2905 and 1.6120 / 1.6140 respectively.

Growing concerns over the employment situation in the US has sparked fresh speculation that the Fed will sustain its current monetary stance that tends to debase the currency. Increased uncertainty across Europe and Asia is keeping the dollar relatively strong, however, continued bond buying will suppress its gains. FOMC minutes published this Thursday and non-farm payroll figures released this Friday should shed further light on the situation.

According to an exclusive report from Reuters, Spain will be ready to request official financial aid as soon as next weekend. This has been supported by a number of other eurozone sources. The report reveals that Germany has  expressed concerns about Spain’s new position and fears it is too early for Spain to request assistance. German Finance Minister Wolfgang Schaeuble stressed that Spain is taking the necessary steps towards regaining control of its public finances and that it is too soon to consider external assistance.

Spanish unemployment change was released this morning at 8am. At +79.6k, the figure was more than double that of the previous month, causing the euro to drop off a little. At 9.30am we have UK construction PMI expected at 50, and at 10am is Euro PPI, forecast at 0.6%, up 0.2% from the previous month.



Support 1.2850 | Resistance 1.2960


Supports 1.0235| Resistance 1.0350


Supports 1.6075 |Resistance 1.6185


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