The Chinese central bank announced that it is removing the floor on the lending rate. This monetary loosening is certainly helpful for the Australian and New Zealand dollars.
AUD/USD broke above the 0.9190 level that capped it in the past few days and peaked at 0.9234 so far. 0.9250 is the next target.
The People’s Bank of China was expected to take some steps to aid the banks after they allowed for a credit crunch back in June. This move aims to help lower company funding costs. Banks will now be allowed to set rates according to commercial principles.
Despite the significant move, the Chinese authorities pledged to keep a close watch on markets and to assess the situation on a day by day basis.
AUD/USD has stabilized after dipping below 0.90 last week. The big resistance line is 0.9344. For more, see the AUD/USD forecast.
Also NZD/USD is on the move, making it as high as 0.7988 before sliding.
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