RBA to Cut Australian Interest Rates by 0.5%

The Australian Dollar exchange rate is the worst performer of the major foreign exchange crosses, down from 85.9 last week to 7925 late yesterday on a series of negatives, not least of which is crashing commodity prices. In addition, global recession in Australia’s big Asian markets can’t be too far behind, suggesting a second wave of expected fear. The domestic data suggests the slowdown already has a grip, with Australian mortgage lending at the slowest pace since 1986 and building approvals down for a second month. RBA Gov Stevens already said the economic expansion is decelerating, and the consensus outlook is for a interest rate cut by a big 50 bp at the Oct 7 policy meeting.

According to Bloomberg, Australian government bonds rose and the yield on the 10-year note fell 27 bp to 5.397%, the lowest since March 2006.

Pounds to Australian Dollars exchange rate currently 2.2500

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