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China’s Central Bank Cuts Interest Rates

The Chinese Central bank, The PBOC has cut interest rates for the first time since 2012. The surprise move of lowering borrowing costs to counteract a cooling economy, which is on track for its lowest annual growth in 24 years (CNBC). The move to reduce rates by 25bps, to 2.75% comes into effect from the 22nd of November

Following the announcement commodity currencies, specifically the Aussie Dollar strengthened from 0.8630 to trade a session high of 0.8721.

Yen

The move follows policy easing by Japan, who increased their quantitative easing with the Yen rapidly depreciating to trade over 118. The decline of the Yen has led to the Japanese finance minister Aso stating that the recent move was “too rapid.”

Mario Draghi

President of the ECB Mario Draghi speaking in Frakfurt this morning said that the central bank was ready to expand asset purchase programmes (QE), if inflation fails to show signs of returning. The comments led to an aggressive move in EURUSD, as it was offered to trade session lows of 1.2423.

The full speech from Draghi can be found here

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