AUD/USD keeps gains despite PBOC's surprise status quo rate decision
- China-sensitive Aussie dollar continues to report gains despite PBOC's reluctance to cut rates.
- The Chinese central bank held benchmark interest rates unchanged.
- Record Fed balance sheet and signs of risk recovery could bode well for the Aussie dollar.
AUD/USD continues to trade in green above 0.58 despite China's decision to keep interest rates unchanged.
The People's Bank of China (PBOC) held the one-year loan prime rate at 4.05% and kept the five-year rate unchanged at 4.75%.
The central bank was expected to cut borrowing costs by five basis points to help contain the negative impact of the coronavirus outbreak on the Chinese economy.
Even so, the AUD is showing resilience, a sign the investors may be done pricing in prospects of a coronavirus-led recession in the Chinese and the global economy.
The uptick in the AUD could also be associated with the risk recovery in the financial markets. the US stocks eked out modest gains on Thursday as oil prices rallied sharply from 20-year lows.
The PBOC's status quo move has come a day after the Reserve Bank of Australia cut rates to a record low of 0.25% and launched a yield curve control program. Most central banks have announced stimulus measures over the last few days.
Federal Reserve's balance sheet has already expanded to a record $4.7 trillion and is expected to rise further with the bank aiming to purchase at least $700 worth of assets in the near term.
That coupled with signs of risk reset could keep the AUD better bid on Friday. At press time, the AUD/USD pair is trading at session highs near 0.5815.
Technical levels
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
