Traders cautious in a less eventful Monday's session

Monday, May 11 2015

It is a less eventful beginning of the week with traders mostly being focused on global concerns. Euro is lower, currently below 1.1150 level, as there is possibility that no final solution will be find for Greece bailout crisis at today's Eurogroup Meeting. Sources familiar with European Central Bank thinking said there was still too little advance on key issues and too much uncertainty for the bank to allow the Greek government to sell more short-term Treasury bills.

Sterling is still higher above 1.5460 area, as after Prime Minister David Cameron’s Conservative Party won a surprise majority in parliamentary elections, easing concerns over lengthy coalition negotiations. Bank of England kept interest rates steady at a record-low 0.5% on Monday, in line with expectations, judging that the outlook for prices and wages is still too weak for it to raise the cost of borrowing despite solid growth prospects.

Aussie is currently being traded around 0.79 handle, down this morning as traders are weighing on recent China rate cut. China cut its interest rates for the third time in six months on Sunday in a bid to lower companies' borrowing costs and stoke a sputtering economy that is headed for its worst year in a quarter of a century.

The People's Bank of China (PBOC) said on its website it was lowering its benchmark, one-year lending rate by 25 basis points to 5.1% from May 11. It cut the benchmark deposit rate by the same amount to 2.25%.

"China's economy is still facing relatively big downward pressure," the central bank said in a separate statement."At the same time, the overall level of domestic prices remains low, and real interest rates are still higher than the historical average," it said. Aussie is likely to find support around 0.7850 level, euro at 1.11 handle and Sterling around 1.54 area. We can expect steadier rest of the session with no major data releases.

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