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PBoC once again cuts interest rates

Monday, Jun 29 2015
It was another uneventful morning part of the session for Aussie however, with initial bearish gap as over the weekend, the People's Bank of China cut interest rates and its deposit rate to 4.85% and the deposit rate to 2% respectively from Sunday. Furthermore, Greek concerns also had effect on Aussie.
 
The PBoC also announced that it will cut the reserve requirement ratios (RRR) by 50 basis points for commercial banks serving rural areas, agriculture and small businesses. The PBoC has now cut interest rates four times since November and this year also reduced the amount of cash banks must keep in reserve three times, as well as using other measures to inject liquidity into the market.
 
As for Australia, HSBC expects the RBA to keep its cash rate on hold for 2016 in order to encourage the Australian dollar to depreciate. According to report authors, Mr Bloxham and Mr Smith, the risks to economic growth are “titled to the downside”.
 
However, risks are related to poor growth coming out of China and therefore dampening demand for Australian exports. A continued lack of confidence in non-mining sectors resulting in weak business investment will also place strain on the economy. HSBC pointed out that the over-inflation of property prices is a notable risk and may cause problems in coming years.
 
Pair is currently being traded around 0.7650 level. Pair is likely to find support around 0.76 handle and resistance above 0.7680 level. Later today, in the US session, Pending Home Sales figures are scheduled for a release.
More in this category: « ELA to Greek banks maintained at its current level Spanish CPI estimated to be 0.1% in June »

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