The chart above (Source: Thomson Reuters) shows the dollar dive from US 77.09 cents to 75.61 cents following the RBA 25 basis points rate cut yesterday. Our call was that the RBA will still hold the rates steady in line with the majority of the market - which was reflected on the magnitude of the fall in the value of the AUD.
The RBA move demonstrated that the bank weighed up the risk of a surging dollar (had it not cut rates) against a slowing global and domestic economy and the unexpected -0.2% fall in the CPI index for the first quarter of this year and determined that the rate cut was required to provide the boost in the economy. We do believe that house prices which were stable and somewhat plateaued in recent months have the potential for a rise; now that the all the major banks except for the ANZ have passed on the full rate cut in their mortgage lending.
In today's morning trading, the dollar has slipped under US 75 cents and trading at US74.95 cents.
The RBA move demonstrated that the bank weighed up the risk of a surging dollar (had it not cut rates) against a slowing global and domestic economy and the unexpected -0.2% fall in the CPI index for the first quarter of this year and determined that the rate cut was required to provide the boost in the economy. We do believe that house prices which were stable and somewhat plateaued in recent months have the potential for a rise; now that the all the major banks except for the ANZ have passed on the full rate cut in their mortgage lending.
In today's morning trading, the dollar has slipped under US 75 cents and trading at US74.95 cents.
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