AUD Grows Despite The Interest Rate Cut - 4.12.2012

Asian trading session was marked by lowering in quotations on Tuesday due to the weak statistics from the USA, published yesterday. American stock indexes such as Dow Jones Industrial Average and S&P 500 also lost about 0.5% yesterday. The activity in the US Production manufacturing sector unexpectedly decreased in November – it is testified by the ISM data. The ISM Manufacturing (see the chart) fell down to the lowest level in three years at 49.5 (previous: 51.7). ISM Manufacturing However, the currency market had no significant risk aversion observed that is traditionally reflected in the US dollar growth. Euro vs US dollar refreshed 6-weeks high at 1.3075 on Tuesday, trying to hold on higher than the psychological level at 1.30. The US dollar index reflecting its behavior vs. bunch of 6 currencies oppositely lowered down to its low at 79.76 (see the chart). USD index, daily chart Among the factors of the optimism growth we note the USA finance minister-Timothy Geithner's speech expressing the confidence that the authorities of the world's largest economy will avoid "fiscal cliff". Besides it, Spain officially requested 50 billion dollars from stability funds for banking recapitalization and Greece will provide 10 billion euros for buying bonds back and debt reduction. Australian dollar rose on Tuesday despite the RBA decision to reduce the interest rate from 3.25% to 3%(se the chart). The AUD/USD grew stronger by 60 points in the morning reaching 1.0464 and EUR/USD rose more than by 50 points. It seems like the interest rate cut was already taken into account in prices but the Central Dank alongside statement was not as pessimistic, as expected by some market participants.