AUD/USD Touches Two Month as China Cuts Again

14

After recently announcing a rate cut for the first time since the outbreak of the financial crisis, China announced a cut in its deposit rate by 0.25% to 3%. China also cut the benchmark lending rate by 31bps to 6% and it lowered the floor for lending rates to 70% of benchmark rates from 80% beforehand.

The announcement came at the same time as the rate decision by the Bank of England, that expanded QE by 50 billion pounds and boosted the pound. AUD/USD is on the rise. EUR/AUD is at the lowest since February 1989.

Update: Follow the live blog of the ECB press conference.

Update: the ECB cut the deposit rate to 0% and the benchmark rate to 0.75% – EUR/USD plunges and AUD/USD rally is limited.

However, EUR/AUD continues falling.

At first, some news agencies reported a cut also in the RRR – a report that was wrong. Nevertheless, more Chinese easing enables more Chinese demand for Australian goods, and this is certainly Aussie-positive.

China is probably undergoing a worse crisis that it admits: this is the second move in recent weeks, and it is supposed to keep growth above the official expectations of 7.5%. Q1 growth stood on 8.1%, but was doubted by many, that look at electricity, orders and additional independent indicators.

AUD/USD is at 1.0305 after reaching 1.0324 on the initial reaction. The last time it went so high was on May 2nd. The next level of resistance is at 1.04. The Aussie had a hard time breaking the 1.0230 level, but after making the move, it continues pushing higher.

For more on AUD, see the Aussie USD forecast.

Get the 5 most predictable currency pairs

About Author

Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

14 Comments

  1. hello sir
    thanks for all your articles
    more Qe in britian why is gbp not losing ground againt crosses

  2. Pingback: British QE Expanded to 375 Billion Pounds – GBP/USD Rises | Forex Crunch

  3. Pingback: AUD/USD Outlook July 2-6 | Forex Crunch

  4. Pingback: ECB Cuts Rate to 0.75%, Deposit Rate to 0% – EUR/USD Dives | Forex Crunch

  5. Pingback: ECB Press Conference Live Blog July 5 2012 | Forex Crunch

  6. Pingback: US ISM Non-Manufacturing Below Expectations, But Jobs Rising | Forex Crunch

  7. Hey. I discovered your own blog site the particular in the search engines. This is an excellent report. Let me ensure that you bookmark it as well as go back to learn more of your tips. We appreciate you the particular article. I willsurely give back.

  8. Pingback: Forex Weekly Outlook July 9-13 | Forex Crunch | Forex

  9. Pingback: NZD/USD Outlook July 9-13 | Forex Crunch

  10. Pingback: USD/JPY Outlook July 9-13 | Forex Crunch

  11. Pingback: USD/JPY: Trading the US Unemployment Claims | Forex Crunch

  12. Pingback: China Still Reports Strong Growth - 8 Reasons to Doubt the Numbers | Forex Crunch

  13. Pingback: 8 Reasons to Doubt the Chinese Growth Numbers | forexdailyanalysis.com