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Forex pairs in this Article » AUD/USD, GBP/USD, EUR/USD, USD/JPY
THE TAKEAWAY: Reserve Bank of Australia cuts its benchmark rate by 25bps > USDJPY hits intraday low of ¥97.49

The Dollar Index is declining for the third consecutive day as the S&P 500 is down by the most since late June. The Dow Jones FXCM Dollar Index (Ticker: USDOLLAR) falls -28 (-0.25%) to $10781 at the time of writing.

The largest event risk today occurred during Asia-Pacific. The Reserve Bank of Australia cut its benchmark rate by 25bps, which was largely anticipated by analysts surveyed by Bloomberg News. The RBA also reiterated many of its former statements. RBA Governor Stevens said, “The Board has previously noted that the inflation outlook could provide some scope to ease policy further, should that be required to support demand … The Board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the inflation target over time.

Global equities are moderately bearish today with the only bright spot being Japan, which pares some of its declines yesterday: S&P -0.58%; Euro Stoxx -0.65%; FTSE -0.23%; Nikkei +1.00%; Hang Seng -1.34% at the time of writing.

AUDUSD 15-minute Chart: August 6, 2013

USD_Plummets_As_SP_500_Faces_Largest_Single_Day_Decline_Since_June_RBA_Cuts_Rates_body_Picture_4.png, USD Plummets As S&P 500 Faces Largest Single Day Decline Since June; RBA Cuts RatesCharts Created using Marketscopeprepared by Kevin Jin

The AUDUSD is firmly higher by +0.50% at the time of writing. Most of these advances occurred immediately following the RBA Rate Decision. Theoretically, a rate cut would propel a weakening of the currency. However, many traders expected the rate cut (Credit Suisse OIS indicated a 91% of a rate cut prior to the event) so the consequent gains in AUDUSD may indicate that the cut was already priced in.

GBPUSD 15-minute Chart: August 6, 2013

USD_Plummets_As_SP_500_Faces_Largest_Single_Day_Decline_Since_June_RBA_Cuts_Rates_body_Picture_3.png, USD Plummets As S&P 500 Faces Largest Single Day Decline Since June; RBA Cuts RatesCharts Created using Marketscopeprepared by Kevin Jin

The GBPUSD is flat, trading -0.01% at the time of writing. The cable attempted runs at London Open and early in New York trading but met resistance around $1.5380 both times.

EURUSD 15-minute Chart: August 6, 2013

USD_Plummets_As_SP_500_Faces_Largest_Single_Day_Decline_Since_June_RBA_Cuts_Rates_body_Picture_2.png, USD Plummets As S&P 500 Faces Largest Single Day Decline Since June; RBA Cuts RatesCharts Created using Marketscopeprepared by Kevin Jin

The EURUSD is slightly higher by +0.23% at the time of writing. The pair consolidated during most of Asian hours but managed to gain some legs early in London trading.

USDJPY 15-minute Chart: August 6, 2013

USD_Plummets_As_SP_500_Faces_Largest_Single_Day_Decline_Since_June_RBA_Cuts_Rates_body_Picture_1.png, USD Plummets As S&P 500 Faces Largest Single Day Decline Since June; RBA Cuts RatesCharts Created using Marketscopeprepared by Kevin Jin

The USDJPY is down by -0.53% at the time of writing. The pair reached an intraday low of ¥97.49, the lowest level since June 26.

--- Written by Kevin Jin, DailyFX Research

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