NEW YORK (TheStreet) -- The Reserve Bank of Australia cut its cash rate on Tuesday, an indication of risks to growth in China and a lack of fear about inflation around the world. The European Central Bank similarly cut its cash rate last week, citing economic contraction throughout the eurozone. Central banks have been forced to stay ahead of the markets, keeping a floor on prices of risk assets.
As Germany continues to underperform -- a trend that began earlier this year -- the euro has followed suit. The descending FXE, seen under the pair, shows that economic contraction from the region has weighed down currency and equity-market strength. The ECB stepped in to take action to limit investor fear, but growth and stability in the eurozone are the only things that will bring back relative strength in both currency and equity markets.
The Aussie Dollar is tightly linked to China, which is a gauge for world demand and commodity market strength. The recent weakness out of China and waning inflation fear allowed the RBA to cut its cash rate. The Aussie/Yen is still in a strong uptrend. The rate cut didn't derail that trend, but further moves look to be tied to upcoming Chinese data. At the time of publication the author held no positions in any of the stocks mentioned. Follow @AndrewSachais This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.