AUD/USD drops to fresh 11-year low as China’s PBOC cuts interest rate

• AUD/USD slumps as the rate cut at the largest customer worry the Aussie traders.
• Aussie unemployment rate disappointed earlier, risk-tone remains mildly positive considering Chinese diplomats’ efforts.
• Coronavirus updates, the US data will be important for now.

AUD/USD slumps to 0.6649, the fresh low since February 2009, after China’s PBOC announced Interest rate cut during the early Thursday.

PBOC matched market expectations…

Following the largely anticipated move, the People’s Bank of China (PBOC) announced a 0.10% cut to its benchmark interest rates. Details suggest a 1-year loan prime rate is at 4.05% versus 4.15% a month earlier whereas a 5-year loan prime rate at 4.75% against 4.80% a month earlier.

Read: Breaking: The People’s Bank of China cut interest rates: AUD and Yuan sliding

The central bank announced a reduction in its medium-term lending facility (MLF) earlier during the week and has already signaled that the rate cut is coming.

Aussie bears the burden following employment data…

Earlier during the day, Australia’s employment data for January failed to cheer the better than forecast Employment Change as Unemployment Rate snapped the two months losing streak with more than expected figure of 5.3%.

Read: AUD/USD drops following higher than expected Aussie Unemployment Rate

Prior to that, Australia’s fourth quarter (Q4) Wage Price Index remained unchanged around 0.5% QoQ the previous day.

Coronavirus uncertainty prevails…

China’s coronavirus continues to flash mixed signals with the latest numbers from Hubei following a re-revised pattern and mark a sharp decline in the infected counts. However, the market’s cheer the Chinese policymakers’ efforts to placate traders with all the efforts they can. The World Health Organization (WHO) also supports the dragon nation and helps the risk-tone.

As a result, the 10-year US treasury yield register gains for the second day to 1.576% by the press time whereas stocks in Australia mark gains worth 0.50% to 7,187 by the press time, as per the ASX 200.

While coronavirus updates will be the key to watch for the near-term direction, investors will also await the US Philadelphia Fed Manufacturing Survey data to confirm the greenback’s latest surge.

Technical Analysis

With the sustained break of 0.6660, AUD/USD prices are declining towards 0.6600 round-figure before targeting late-February 2009 top surrounding 0.6545.