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FXstreet.com (Barcelona) - In today's RBA decision, the central bank has decided to cut rates by 25bp from 3.5% to 3.25%. The initial market reaction was to aggressively sell the domestic currency, as market participants pricing for -25bp to about 65% being proven right. Only 9 out of 28 replying to a Bloomberg survey agreed to such outcome, so it has been certainly a close call among the investment community.

The call to reduce rates was premised on the signs of concern over China evident in RBA commentary in October as well. According to the RBA statement, "Growth in China has also slowed, and uncertainty about near-term prospects is greater than it was some months ago." RBA also said mining investment may peak at a lower level that previously expected. RBA are also of view that global slowdown represents domestic growth outlook weaker. CPI is consistent with target.

Further cuts should not be ruled out. According to Stephen Koukoulas, Managing Director of Market Economics, "I reckon RBA has more to do. High risk of another 25 in Nov. Jobs data crucial."

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