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Market Extra: The RBA can’t stop the Aussie from strengthening

The Reserve Bank of Australia cut its benchmark interest rate to an all-time low on Tuesday, but judging by the reaction in the Australian dollar, you’d think interest rates were raised.

Though it briefly weakened following the announcement, the Aussie AUDUSD, +0.9290% soon turned sharply higher, and was recently on track to log its largest daily gain in two months.

The move presents a problem for the RBA, which acknowledged that the strengthening Aussie could complicate some of the problems with Australia’s economy, like sluggish consumer-price inflation and slowing home lending.

But it also suggests that Australian monetary policy has taken a back seat in the minds of currency traders, ceding its influence to other factors.

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