In the first rate cut in over two years, the People’s Bank of China announced a rate cut. While a move was expected, the timing was surprising from Australia’s No. 1 trading partner.
AUD/USD is moving up, flirting with 0.87. This moves saves the pair from a not so good week otherwise.
China cut the one year lending by 0.4% and the deposit rate by 0.25% to 2.75%. In addition, they raised the deposit rate ceiling to 20% above the benchmark from 10% beforehand. It also said that it advances reforms on interest rates.
More stimulus in China implies more demand for Australian commodities. This comes amid a slump in prices of copper, iron ore and also gold.
AUD/USD emerged from the lows under 0.86 and peaked at 0.8720. Further resistance awaits at 0.8820 before the tough line of 0.89. Weak support awaits at 0.8660 with the 0.8540 serving as the bottom line in the sand. For more, see the AUDUSD forecast.
And here is the latest Elliott Wave Analysis: AUD/USD can correct upwards
Here is how it looks on the chart:
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