RBA cuts interest rates by 50bps to 3.75%

The RBA have cut interest rates in answer to a very weak domestic economy. Most of the growth in Australia and hence the AUD comes from sovereign demand. We've seen similar sell-offs in previous rate cuts but yet the trend has continued. With slightly positive data coming out of China, many fundamentalists are calling for the trend to continue to the upside in AUD. However technically, we need to wait for the correct price action to confirm this. As the currency is heavily traded on external factors, such as sovereign demand....a better way to play AUD will be looking at EURAUD. If sovereign demand is weak towards the AUD then we will likely see a rally in EURAUD as most sovereigns would rather have Euros than the US Dollar due to their QE3 policy and huge deficit. Also, most sovereign nations, currently, have a greater interest in European exports than the US.