Unchanged as expected, AUD / USD continues to correct upward
China is keeping 1-year LPR unchanged at 3.85% as expected – keeping 5-year LPR unchanged at 4.65% as expected.
The PBoC also increased a daily cash injection to CNY 120 billion.
TD Securities analysts explained ahead of today’s decision that “although there has been a marked deterioration in economic activity, the PBoC is unlikely to react with a brutal tool such as a reduction in LPR although there remains a risk of a small 5-10bp cut by the end of the year. ”
The MLF liquidity injection has been carried out at a constant rate, which implies that the LPR rates will also be unchanged. We think there is a greater chance of another reduction in the RRR soon. ”
Meanwhile, bulls in AUD / USD come in as Evergrandge’s risk aversion sentiment eases.
Price should continue to rise in an upward correction, as shown in the following previous analysis, AUD / USD buyers are considering a bullish correction as the risks of Evergrande begin to ease:
“The daily fuse shown in the previous daily chart has been filled in target and now the bulls may well see the value here. A return to an average reversion of 50% that meets the old structure could be targeted towards 0.7280. However, failures below 0.7220 open the risk of retesting mid-August lows and 071 the number. ”