(Bloomberg) Australia’s dollar fell after the central bank cut interest rates to a record, wrong-footing hedge funds betting on the currency’s strength. The Aussie weakened against its 16 major peers after Reserve Bank of Australia Governor Glenn Stevens and his board lowered the cash rate by 25 basis points to 1.5 percent, as predicted by 20 of 25 economists surveyed. Swaps traders saw about a 75 percent chance of a cut earlier Tuesday, helping to drive down Australian bond yields to unprecedented levels. The Aussie economy is struggling to gain momentum amid weak inflation, record-low wage growth, and a currency that strengthened as much as 15 percent from its January trough.
Aussie Declines as RBA Rate Cut Wrong-Foots Bullish Hedge Funds
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