Today, the Reserve Bank of Australia decided to implement a cash rate cut, lowering it to the level of 0.75% for the first time in its history. The rate cut is a response to the weak economic growth in Australia, which has been worrying investors for months.
The main reason for the slowing of the Australian economy is the trade conflict between the United States and China. Because China, whose growth was already slowing down, is doing much worse right now, it cannot buy the commodities it usually gets from Australia, or at least not in the volume that would allow the Australian economy to flourish.
As a result, the American dollar continued to strengthen against all other major currencies, with the dollar index reaching 99.21. The USD appreciated against the Australian dollar, as well as the New Zealand one, reaching a 10-year-high against the latter.
The USD also rose against the Japanese yen, after a disappointing economic sentiment report from Japan.
Currently the American dollar is also applying pressure on the two main European currencies - the euro and the pound. The EU and the UK are engaged in hectic Brexit negotiations right now. British PM Boris Johnson is set to present his withdrawal plan before the European Union tonight, so we would likely have more Brexit developments this week.
