PBOC’s Liu: Should consider CPI and other factors before adjusting benchmark deposit rate

Dhwani Mehta FXStreet

Following a press conference on Friday, People's Bank of China (PBOC) Vice Governor Liu Guoqiang said that the central bank should consider CPI and other factors before adjusting the benchmark deposit rate.

Further comments

Need to consider further before changing deposit rate - need a complete evaluation before changing.

Deposit rate is a tool, need to be balanced in its use.

China has ample policy tools to cope with impact from coronavirus outbreak.

Won't allow credit crunch or flood of credit

Must ensure M2, loans grow slightly faster than nominal GDP.

Virus shock to china's economy is temporary.

China eco performance in march to be better than February.

Virus effects haven't exceeded 2008 crisis yet.

Can't say how large effect of virus will be on global economy.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

EUR/USD looks well bid above 1.1600

EUR/USD extends its recovery and climbs back above the 1.1600 mark in quite an auspicious start to the week. Improved risk appetite following the US-Iran agreement to reopen the Strait of Hormuz continues to weigh on the US Dollar, lending support to the risk complex. Looking ahead, investors are likely to remain on the sidelines ahead of Wednesday's FOMC meeting.

GBP/USD climbs to multi-day highs around 1.3460

GBP/USD remains comfortably in positive territory north of 1.3400 the figure on Monday. Cable continues to draw support from an improvement in market sentiment after reports that the US and Iran have reached a framework agreement aimed at ending the conflict and reopening the Strait of Hormuz.

Gold extends the recovery, targets $4,400

Gold rallies on Monday and climbs well above the $4,300 mark per troy ounce. The precious metal benefits from renewed selling pressure on the Greenback as investors reassess the implications of the US-Iran agreement to end hostilities and reopen the Strait of Hormuz. Market participants now turn their attention to Wednesday's FOMC gathering.

Crypto Today: Bitcoin, Ethereum, XRP recovery gathers strength as US-Iran reach peace agreement

Cryptocurrency prices remain broadly elevated on Monday, led by Bitcoin’s upswing toward $66,000. Altcoins, including Ethereum and Ripple, mirror Bitcoin’s momentum, trading above $1,700 and $1.18.

President Trump announced that the deal with Iran is complete

President Trump announced that the deal with Iran is complete and he authorises the toll-free opening of the Strait of Hormuz and removal of the US Naval blockade. While the agreement is made, it is expected to be signed on Friday to take effect. The Forex market looks stable and could react slowly to the positivity around the news as Iran still expresses its mistrust on the US.

4.2% headline, 0.2% core: Why the Fed's next hike may be targeting the wrong problem

May's CPI put headline inflation at 4.2% on the year, up from 3.8% in April and the hottest reading since April 2023, while core prices rose just 0.2% on the month, undershooting the 0.3% consensus and halving April's pace.