The Reserve Bank of Australia cut the interest rate by 25 basis points to 1.50%. They say the rate cut could help the economy and that a rising Australian dollar could complicate the economic transition.

The transition is needed as China is slowing down as the Bank acknowledges. They probably did not get the recent positive data from China yesterday: the independent Caixin PMI moved to positive territory.

And how is Australia doing? The team led by Glenn Stevens says the economy is growing at a moderate pace but that labor market data is somewhat mixed.

Inflation, the main mandate of the RBA is “quite low” and they see it remaining as such for some time. This phenomenon is not limited to the land down under.

Regarding the other type of inflation, that from housing, they see less risks of an overheating market. In the past, Sydney as been singled out.

AUD/USD dipped as far as 0.7480 but bounces back quickly above 0.75. Resistance awaits at 0.76. Support is at 0.7440.

Here is how the quick move looks on the chart. It is important to remember that most (albeit not all) analysts expected a rate cut. The big hint for a cut was given by the RBA itself in its latest meeting minutes.