11 Feb 2015
AUD/USD weighed by PBOC Q4 policy report
FXStreet (Bali) - AUD/USD exhibited a one-way traffic in the last London session, dragging the rate down from 0.7825/30 to 0.7765/70, with US players extending losses, if only marginally, towards 0.7745, where some strong bids were scattered to produce a 0.7790 high bounce, now at 0.7770.
The People's Bank of China (PBoC) released its Q4 monetary policy report earlier on Tuesday, ahead of the London open, in which according to Nomura Economists, "it confirms a more accommodative stance."
Nomura adds: "Overall, we think the report indicated a slightly looser bias, which is consistent with our view (see China: Five reasons to expect a lot more monetary easing in 2015, 4 February 2015). We believe last week’s RRR cut was just the start of a series of easing measures. We maintain our call for three more RRR cuts (50bp each quarter) and one 25bp benchmark interest rate cut in Q2 this year."
The instant market reaction was to rule out immediate PBOC easing despite the weaker Chinese CPI/PPI data on Tuesday. As soon as the report got airplay across dealing desks, the AUD came under intense pressure, which adds to the negative inputs forging ongoing bearish tendencies, with the leading driver still being further rate cut expectations by the RBA in the months to come.
The People's Bank of China (PBoC) released its Q4 monetary policy report earlier on Tuesday, ahead of the London open, in which according to Nomura Economists, "it confirms a more accommodative stance."
Nomura adds: "Overall, we think the report indicated a slightly looser bias, which is consistent with our view (see China: Five reasons to expect a lot more monetary easing in 2015, 4 February 2015). We believe last week’s RRR cut was just the start of a series of easing measures. We maintain our call for three more RRR cuts (50bp each quarter) and one 25bp benchmark interest rate cut in Q2 this year."
The instant market reaction was to rule out immediate PBOC easing despite the weaker Chinese CPI/PPI data on Tuesday. As soon as the report got airplay across dealing desks, the AUD came under intense pressure, which adds to the negative inputs forging ongoing bearish tendencies, with the leading driver still being further rate cut expectations by the RBA in the months to come.