AUD/USD surges to fresh monthly high after PBOC rate decision, China data

• AUD/USD rises to the highest since September 18.
• PBOC announced a minor change to one-year LPR, China House Price Index weakens.
• Trade headlines in the spotlight amid a light economic calendar.

With an extension of easy money policy at the largest customer joining trade positive headlines, the AUD/USD pair surges to fresh monthly high while taking the bids to 0.6860 during Monday’s Asian session.

China’s central bank, People’s Bank of China (PBOC), held its one-year loan prime rate (LPR) at 4.20%, down from the previous rate of 4.25%.  The LPR is set  based on a spread above the Medium-Term  Lending Facility (MFL) rate on a monthly basis. On the economic front, China’s September month House Price Index dropped to 8.4% from 8.8%.

Adding to the Aussie’s strength could be trade-positive headlines from China’s South China Morning Post (SCMP) while warnings by the incoming European Central Bank (ECB) President Christine Lagarde seems to have been ignored.

Risk-tone stays mostly unchanged despite uncertainty surrounding Brexit and mixed trade headlines. As a result, the US 10-year Treasury yields cling to 1.75%.

Given the lack of major data/events on the economic calendar, investors will keep a tab on trade/Brexit headlines for fresh impulse.

Technical Analysis

A daily closing above 100-day Exponential Moving Average (EMA) level of 0.6852 becomes necessary for the pair to question September month high close to 0.6900, failing to which could drag the pair back to 0.6810 and 50-day EMA level of 0.6800.