Traders surprised by Australian rate cut

Sydney Australia

The Reserve Bank of Australia (RBA) surprised the market with its decision to cut its benchmark interest rate by 25 basis points to 2.75% on May 7, and traders are now positioning themselves short the Australian dollar, expecting a gradual fall below parity with the US dollar.

The RBA decision, which according to governor Glenn Stevens was taken to encourage sustainable growth in the economy, saw the Aussie take a dive last week. Having traded as high as 1.06 a month ago, AUD/USD fell to 1.0024

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