- PBoC cut bank reserve ratio from 20.0% to 19.5%
- Australian retail sales up by 0.2% vs. 0.3% estimate
- Australia’s HIA new home sales down by 1.9% in Dec
- Nikkei down by 0.98% for the day
- BOE interest rate statement coming up
It looks like those risk rallies were too good to last! Higher-yielding currencies returned some of their recent forex gains in the past few hours, as traders hesitated to take on more risk. The Nikkei ended 0.98% lower for the day, with most Asian equities also closing lower.
News that the PBoC decided to cut its reserve ratio from 20.0% to 19.5% brought growth concerns back on the table since most market participants interpreted this as a sign that the world’s second largest economy might be in for another slowdown. This pushed the Aussie lower in the early Asian session, along with the weaker than expected Australian retail sales report which indicated a mere 0.2% uptick versus the projected 0.3% increase. In addition, Australia reported a 1.9% slide in HIA new home sales for December, another sign that demand is cooling.
Up ahead, the forex calendar shows that the British pound could steal the spotlight in the next few hours, as the BOE is set to make its monetary policy announcement. No actual changes are expected in interest rates and asset purchases, but the tone of their statement could determine where pound pairs could be headed. Better read up on my buddy Forex Gump’s preview for the BOE statement if you’re planning on trading the news!
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