PBoC interest rate decision: Unchanged as expected, AUD/USD continues to correct higher

Ross J Burland FXStreet

China keeps 1-year LPR unchanged at 3.85%, as expected - keeps 5-year LPR unchanged at 4.65%, as expected.

PBoC also boosted a daily liquidity injection to CNY120Bln.

Analysts at TD Securities explained ahead of today's decision that ''while there has been a clear deterioration in economic activity, PBoC is unlikely to react with a blunt tool such as a cut in the LPR though there remains a risk of a small 5-10bp cut by year-end.''

''The MLF liquidity injection was undertaken at a constant rate, implying that the LPR rates will also be unchanged. We think there is a greater chance of another cut in the RRR soon.''

Meanwhile, AUD/USD bulls are stepping in as the Evergrandge risk-off sentiment abates.

The price would be expected to continue higher in a bullish correction as illustrated in the following prior analysis, AUD/USD bulls eye a bull correction as Evergrande risks start to abate:

''The daily wick as illustrated in the prior daily chart was filled into the target and now the bulls could well see value here. A run back to a 50% mean reversion that meets old structure could be targetted near 0.7280. However, failures below 0.7220 open risk of a retest of the mid-Aug lows and 071 the figure.''

AUD/USD live market

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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