Currency Market Analysis

Dec 07, 2021 | Currency Market Analysis

Global Themes

Aussie rebounds from lows after China rate cut; RBA due

• China move boosts markets
• AUDUSD rebounds from 13-month lows
• RBA due at 2.30pm AEDT

China easing helps Aussie

Major financial markets rebounded overnight after a heavy sell-off on Friday with last night’s rebound driven by a move to loosen policy from the People’s Bank of China.

The PBOC cut the reserve ratio requirement (RRR) – a key benchmark used to manage liquidity in the banking system – by 50 basis points.

The official one-year rate remains at 3.85% with the PBOC still keen to manage broader excesses in the Chinese financial system.

US shares rebounded with the S&P 500 up 1.9% and the Nasdaq higher by 0.9%.

AUDUSD rebounds

The AUDUSD gained 0.6% as it bounced from 13-month lows.

The AUD was stronger in other markets with the AUDEUR up 1.0% with the AUDJPY gaining 1.3%.

RBA due

The highlight today comes from the Reserve Bank of Australia with the final interest rate decision for the year due at 2.30pm AEDT.

The RBA ended its yield curve control program last month but continued to say rates were likely to remain on hold until 2024. The market expects no significant change today.

Later, German confidence numbers are due, but the key release tonight comes from US wages and productivity growth.

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