- Chinese central bank cut benchmark rate from 4.60% to 4.35%
- PBOC also lowered deposit rates and RRR
- PBOC Vice Gov: Chinese economy can expand by 6-7% over next 3-5 years
- German Ifo business climate index to fall from 108.5 to 108.1?
Comdolls kicked off the trading week on a good note, as forex market participants seem hopeful that the latest set of rate cuts from the Chinese central bank would be enough to turn things around. Asian equity indices are also in the green, with the Nikkei enjoying a 0.75% lead and the China A50 index up by 0.92%.
AUD/USD is up 46 pips to .7252 (+0.58%) while AUD/JPY is up 18 pips to 87.77 (+0.22%), as a potential pickup in China could mean stronger demand for Australia’s commodity exports. NZD/USD is up 32 pips to .6782 (+0.47%) and NZD/JPY is up 13 pips to the 82.00 handle (+0.16%).
Aside from monetary stimulus, traders also seem positive that the upcoming plenum among Chinese leaders this week might also yield a strong long-term plan to keep the country’s growth supported. According to PBOC Vice Governor Yi Gang, the Chinese economy can still expand by 6-7% over the next three to five years, hinting that there could be room to lower the RRR further.
Up ahead, all eyes and ears could turn to the euro, as Germany is set to print its Ifo business climate index for October. The reading is slated to drop from 108.5 to 108.1 during the month, reflecting weaker optimism among businessmen. Also lined up today are the BBA mortgage approvals and CBI industrial expectations data from the United Kingdom so pound forex pairs might also undergo additional volatility.
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