(CN) CHINA CENTRAL BANK – PBOC CUTS INTEREST RATES (KEY 1-YEAR BENCHMARK RATES);
Special Insight: The PBoC’s “prudent” monetary approach came into effect in December 2010, replacing its earlier “moderately loose” monetary policy. China has maintained a proactive fiscal policy since the inception of the 2008 financial crisis.
Previously: June 7th: (CN) CHINA CENTRAL BANK (PBOC) CUTS KEY ONE-YEAR BENCHMARK RATES BY 25 BPS (FIRST CUT SINCE DEC 2008); as speculated.
How to interpret these headlines?
I don’t know if this is becoming a habit, but PBoC has been announcing its surprise Rate Decision by beating BOE (Bank of England) to the punch, 2 times in a row now. Last time it was also seconds before the BOE Rate Decision release where PBoC made the surprise announcement and ended up pretty much overshadowing the BOE Rate Decision for the rest of the day, and if this becomes a habit, then we will have to re-think how we trade BOE Rate Decisions.
With that being said, I believe this takes the edge off risk aversion sentiment for the time being, and obviously AUD is getting a lot of support that despite of the disappointment from ECB, AUD still manages to end the day in positive territory where EUR is likely to end up negative 150 pips… Therefore, I am more open now to BUY AUDUSD or AUDJPY on dips as actions out of China, Australia’s largest trade partner, should keep demand for AUD high, and considering that RBA decided to keep rates unchanged this week, AUD should remain resilient.
PBoC Cuts Interest Rates
July 5, 2012 by 1 Comment