Market Brief: PBOC in Action AUDUSD at 11-Year Lows
Asian stocks finished mixed today after PBOC cut the benchmark one-year prime rate by 10 bps, and the five-year prime rate by 5 bps. Yesterday the People’s Bank of China cut the one-year medium-term lending rate to 3.15% from 3.25%. China as it has already said will use all available tools to offset the negative impact of the coronavirus outbreak.
Federal Reserve released yesterday the minutes of the January policy meeting indicating that rates may remain on hold for many months ahead. Fed noted that it closely follow the coronavirus outbreak and will take any necessary action when needed.
Nikkei 225 closed up 0.34% at 23479. The Hang Seng Index is 0.30% lower at 27580 and the Shanghai Composite ended 1.84% higher at 3030. The Singapore Straits times ended 0.48% lower at 3198. Aussie shares hit a fresh all-time high in early trading but ended only 0.25 higher at 7162.
In our trading calendar, the UK retail sales yearly and monthly readings will be released at 9:30GMT. In the U.S. we have the Philadelphia Fed Manufacturing Index and Initial Jobless Claims due at 13:30GMT. The Canadian New Housing Price Index m/m will also be published at 13:30GMT.
AUDUSD drops to 11-year lows after the Unemployment Rate increased to 5.3% above the expectations of 5.2%. Dismal Aussie economic data might pressure the Reserve Bank of Australia to proceed with further cuts. AUDUSD is 0.68% lower at 0.6631 as the technical outlook is clearly bearish.
First support for the AUDUSD will be met at 0.6629 the daily low, while a break below might test the March 16th 2009 low at 0.6530.
On the flip side, initial resistance stands at 0.6695 the daily top. A break above will meet the next resistance at 0.6707 the high from yesterday’s trading session. In case of a bullish break the next supply zone would be met at 0.6732 the high from February 17th.