The Reserve Bank of Australia has announced it will cut the official cash rate by 25 basis points in August, to a historically low 1.50%.
The decision comes off the back of the weak growth in the United States reported last Friday, extremely low inflation in Australia and a perceived stabilising in the Melbourne and Sydney property markets.
Economic data coming out of the US shows much slower than expected GDP growth in June. Annual GDP growth in the US economy was just 1.2% in June, which is well below its forecast of 2.6%. The weakened confidence in the US economy has cast doubt on future cash rate increases by the US Federal Reserve and subsequently the USD fell sharply.
Typically, when the USD goes down the AUD goes up.
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