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The RBA cut the cash rate 25pts to 3.50%.

Written by Sam Coxhead on June 5th, 2012.      0 comments

4:43 PM (NZT) The RBA just announced they had cut the cash rate by 25pts to 3.50%. The market has priced 40pts of easing , so after initial weakness the AUD has actually posted modest gains since the announcement.
The RBA sees room for further moderation in Chinese growth, and potential for further weakening of the European economy. It stated the cut was afforded by the modest domestic outlook and weaker international environment.
If inflation indicators enable further easing, it looks likely that this will be forth coming in the coming months.
In the offshore session overnight the price action was particularly choppy. There has been evidence of a “short squeeze” in risk assets as short term investors scrambled cover positions. Noise in Europe continues as political posturing sends further mixed messages to the markets.
Asian equity markets were well lower and US factory orders were lower than expected. The relief rally in risk assets was aided by the unlikely premises that a G7 meeting to discuss Europe would produce some kind of meaningful outcome.
          Past 24 hours
  Current level Pre-RBA  % Chge since RBA   Low High
NZD/USD 0.7582 0.7585 -0.04%   0.7497 0.7604
AUD/USD 0.9778 0.9758 0.20%   0.9625 0.9774
NZD/AUD 0.7756 0.7773 -0.22%   0.7747 0.7798
AUD/NZD 1.2893 1.2865 0.22%   1.2824 1.2908
NZD/GBP 0.4923 0.4928 -0.10%   0.4885 0.4936
NZD/EUR 0.6050 0.6055 -0.08%   0.6035 0.6086
NZD/YEN 59.37 59.40 -0.05%   58.59 59.57
NZD/CAD 0.7860 0.7865 -0.06%   0.7814 0.7893
Topics: 25pt cut to the cash rate, RBA