Emergency again! RBA rate cut, Australian dollar dropped to 0.55 area earlier
In the Asian session on Thursday, the Reserve Bank of Australia held an emergency meeting, announcing another 25 basis point cut in interest rates, to a record low of 0.25%. The RBA said it will not raise interest rates until full employment is achieved and progress has been made on inflation.
Earlier this morning, the Australian dollar fell to the day low 0.5506. However, after the announcement of the rate cut, the Australian dollar has rebounded and is currently trading at the level of 0.57. It is very likely that when the negative factor realized, “buy the rumor sell the news” happened.
In addition, the European Central Bank announced last night that it had launched an emergency debt buying program of 750 billion euro. ECB President Lagarde pointed out that extraordinary action is needed in extraordinary times.
The market now believes that in order to cope with the economic shock caused by the new coronavirus epidemic and the instability of financial markets, more and more measures will be released in various parts of the world.