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The RBA decided to cut the interest rate by 0.25% to 3%. This is the lowest level since the financial crisis broke out. The move was widely expected, and  actually  already priced in.

So, the initial reaction was a higher AUD/USD, also thanks to the rather upbeat statement by the central bank.

Glenn Stevens and his colleagues mentioned that Chinese growth has stabilized and that signs policy is beginning to work. Regarding Chinese growth, recent PMIs certainly point to the upside, with both the official and the HSBC manufacturing PMIs both pointing to growth.

On the other hand, global risks are still to the downside according to the central bank. Australia still has a high interest rate in a world where rates are clinging to zero.

AUD/USD rose from 1.04 before the release to 1.0463 at the time of writing. The pair made an initial sharp rise, the fell a bit, and is now grinding steadily higher.

For more, see the Australian dollar forecast.