FxWirePro: AUD/USD slumps below 0.76 on RBA rate cut decision
Tuesday, May 3, 2016 5:01 AM UTC
- AUD/USD plunged almost 140-pips after the Reserve Bank of Australia slashed the benchmark interest rate by 25bps to a record low of 1.75%.
- Meanwhile, National Australia Bank announced within minutes of the decision that it would pass on the 25 basis point reduction in full.
- RBA’s decision came despite reports of resilient business confidence and conditions yesterday and also follows on the heels of strong building approvals numbers this morning.
- Despite the unemployment rate falling to a 2.5-year low of 5.7 per cent in April and above average economic growth, a shock 0.2 per cent fall in the consumer price index in Q1 convinced the Board to cut interest rates for the first time since May last year.
- The pair is currently trading at 0.7568, holding above strong trendline support at 0.7560.
- A break below the 50-DMA at 0.7550 opens 0.7500 and a break there would otherwise confirm the major reversal.