China: Multi-faceted support measures amid trade tensions - ANZ

Sandeep Kanihama FXStreet Contributor

In view of analysts at ANZ, China has paved the way to provide more stimulus to the economy amid concerns about a protracted trade war and the takeover of Baoshang Bank, both of which have caught the markets off-guard lately.

Key Quotes

“Since last Friday, the Chinese government has announced two measures to support domestic consumption and investment. In the financial markets, the People’s Bank of China (PBoC) has made efforts to ensure market liquidity, especially for smaller banks, in the wake of the Baoshang Bank takeover.”

“While China is readying itself for prolonged trade tensions with various policy measures recently, the market will be watching closely the G20 Summit in Japan (28-29 June) as it poses a near-term key event risk.”

“The most optimistic scenario at the upcoming G20 would be a truce similar to last December’s G20 in Argentina, in our view. On the other hand, under the worst-case scenario, negotiations will remain at an impasse with no agreement on key principles and the US proceeds to apply an additional 25% tariff on USD300bn of Chinese imports.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

EUR/USD accelerates losses, focus is on 1.1800

EUR/USD’s selling pressure is gathering pace now, opening the door to a potential test of the key 1.1800 region sooner rather than later. The pair’s pullback comes on the back of marked gains in the US Dollar following US data releases and the publication of the FOMC Minutes later in the day.

GBP/USD turns negative near 1.3540

GBP/USD reverses its initial upside momentum and is now adding to previous declines, revisiting at the same time the 1.3540 region on Wednesday. Cable’s downtick comes on the back of decent gains in the Greenback and easing UK inflation figures, which seem to have reinforced the case for a BoE rate cut in March.

Gold picks pace, flirts with $5,000

Gold is back on the front foot on Wednesday, shaking off part of the early week softness and pushing higher towards the key $5,000 mark per troy ounce. The move comes ahead of the FOMC Minutes and is unfolding despite an intense rebound in the US Dollar.

Fed Minutes to shed light on January hold decision amid hawkish rate outlook

The Minutes of the Fed’s January 27-28 monetary policy meeting will be published today. Details of discussions on the decision to leave the policy rate unchanged will be scrutinized by investors.

Mixed UK inflation data no gamechanger for the Bank of England

Food inflation plunged in January, but service sector price pressure is proving stickier. We continue to expect Bank of England rate cuts in March and June. The latest UK inflation read is a mixed bag for the Bank of England, but we doubt it drastically changes the odds of a March rate cut.

Sui extends sideways action ahead of Grayscale’s GSUI ETF launch

Sui is extending its downtrend for the second consecutive day, trading at 0.95 at the time of writing on Wednesday. The Layer-1 token is down over 16% in February and approximately 34% from the start of the year, aligning with the overall bearish sentiment across the crypto market.