News just out

  • reserve requirement ratio cut by 0.5% effective tomorrow 1 March
  • PBOC say rate cut to maintain reasonable, ample liquidity in financial system
  • RRR cut will help create appropriate monetary financial environment to support supply side reform.

CNY and CNH both posting 3 week lows vs USD after the announcement.

It's the fifth cut since Feb last year and had been widely touted in the Chinese press. Eamonn had this last Thursday where the following observation was made:

"RRR cut will not bring pressure for yuan depreciation as long as authorities can manage market expectations well"

So with immediate posting of 3 week lows we wait to see whether it was kneed-jerk or more substantial.

AUDUSD on the rise to session highs of 0.7168 on the expectation that the cut will benefit local economies. We'll see about that one too.

Meanwhile EURUSD still digging in around 1.0900 but with euro generally softer all round.