For a second week the Aussie was the weakest-performing major currency. Investors were not overly enchanted by any of the commodity-related currencies, preferring the safe-haven euro, Japanese yen and US dollar. Their concern stemmed from doubts about the global economy, doubts which were fed by lacklustre economic data from around the world.
Investors' particular problem with the Aussie was the Reserve Bank of Australia. Although the previous week's inflation data had flagged a possible rate cut, few analysts had expected one this month. But that is what they got, as the RBA lowered its Cash Rate by 25 basis points to a record low 1.75%. The Aussie took an immediate four-cent bath and lost a further two cents this Friday when the RBA marked down its expectations for inflation. Overall it was down by two and a half US cents on the week and lost four and a half cents to sterling.