The
People’s Bank of China cut its 1- and 5-year Loan Prime Rates today
by 10 bp each. It’s the first LPR cut in 10 months. Rates are now:
- 1-year
3.55% (from 3.65%) - 5-year
4.2% (from 4.3%)
The
cuts were expected and followed 3 cuts to separate policy rates last
week. In
addition, the Bank set a weaker CNY rate at the daily reference rate
fixing. Offshore
yuan, CNH, slid lower on the session.
From
the Reserve Bank of Australia today we had the minutes of the June
meeting. In these the Bank indicated its rate hike was a close call. The
Bank discussed wage developments, noting higher-than-expected wage
gains. Given the strong labour market data last week a rate hike in
July looks like it’ll happen, but again it’ll be a close call. Note
that while reference to further rate increases were dropped in the
minutes, Reserve Bank of Australia Governor Lowe did mention this in a
speech he gave the day following the June rate hike.
RBA
Deputy Governor Bullock is speaking at 0430 GMT/0030 US Eastern
time/2.30pm Sydney time. Any comments she has on her policy outlook
will be keenly pored over for further clues.
AUD/USD
has dropped after the China and Minutes news.
USD/JPY
swung around during the session, The initial move was higher, getting
above 142.20 briefly. Some jawboning from the finance and industry
ministers prompted the rate to fall back towards 141.60.
Asian
equity markets:
-
Japan’s Nikkei 225 -0.6%
-
China’s Shanghai Composite -0.4%
-
Hong Kong’s Hang Seng -1.3%
-
South Korea’s KOSPI -0.3%
-
Australia’s S&P/ASX 200 +0.5%
AUD/JPY got hit by a falling AUD/USD and then USD/JPY giving back its earlier pop: