China Steps Up Easing With Second Rate Cut in Three Months | Forex Factory

China Steps Up Easing With Second Rate Cut in Three Months | Forex Factory

China Steps Up Easing With Second Rate Cut in Three Months

From bloomberg.com

China’s central bank cut benchmark interest rates for the second time in three months as disinflation gives room to step up support for the nation’s slowing economy. The one-year deposit rate will be lowered by 25 basis points to 2.5 percent and the one-year lending rate will also drop by a quarter percentage point to 5.35 percent on March 1, the Beijing-based People’s Bank of China said on its website late Saturday. The move reflects deepening concern over an economy squeezed by a property slump, tighter controls over local government debt and rising capital outflows. By adding rate cuts to a reduction in the ... (full story)

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Mar 1, 2015 11:39am

Why they built all those Ghost Towns and wasted all their peoples retirement money on places that no one goes to, I will never figure that out. Baby boomers are passing on and many things will be left behind not to be used. Another bubble ready to burst.

Mar 1, 2015 12:07am

Are you guys sure it won't gap up? I mean, the Aussie rallied 200pips after the initial drop on RBA rate cut. The market has time to digest things before Sunday's open.

p.s. This is why I rarely hold trades over the weekends. News could get you bad if you guess wrong.

Mar 1, 2015 8:56am

Quoting tafadzwa02

Disliked

AUDUSD will gap down guys , what are you analysing here .If there is a rate cut i means the currency drops , so because of the link betwen China and Aussie , if the Chinesse Currency drop , so does the Aussie .Another sorry state of affairs for Aussie
e.g
http://www.reuters.com/article/2014/...0U70M020141223

http://www.investing.com/news/forex-...raction-329506

Ignored

In the first link, why are you giving us information from an article dated December 2014???

And in the second link, you posted an article that talks about an aussie rally which contradicts your view of a gap down.

Weird

Mar 1, 2015 3:45pm

Quoting Hotkqash

Disliked

Robertk,your take seems much like the long term benefit of rate cuts which is to stimulate the Real Economy.In the cash market,rate cuts are seen as negative for the host currency(central banks don`t mostly cut rates unless the real economy shows signs of weakness)and a rate cut is a monetary policy tool deployed to stir up the economy once deflationary signs looms.

Traders don`t long rate cuts, they short it!

Ignored

you bring a valid argument, but remember that this is a currency that is not the "host" rate cuts in china for Aussie will mean stimulus, and markets tend to rise on stimulus regardless of "why" its no secret china is shriveling up. Its no secret its housing bubble going to go KABOOOOOOM So the fact of the matter it is an opportunity and when opportunity dies out, the next step will be downside but to say that right now the market is so "logical" never works, because the market does not have the "long term consequences in mind" it focus on the moment! and the moment is buy the next moment is sell etc..

Mar 1, 2015 12:41pm

Quoting tafadzwa02

Disliked

AUDUSD will gap down guys , what are you analysing here .If there is a rate cut i means the currency drops , so because of the link betwen China and Aussie , if the Chinesse Currency drop , so does the Aussie .Another sorry state of affairs for Aussie
e.g
http://www.reuters.com/article/2014/...0U70M020141223

http://www.investing.com/news/forex-...raction-329506

Ignored

Why the hell would Aussie drop as well? A rate cut improves exporting, making products cheap in comparison for Australia. Aud will only benefit from this because it stimulates trading between...

Mar 1, 2015 3:03pm

Quoting Hotkqash

Disliked

Robertk,your take seems much like the long term benefit of rate cuts which is to stimulate the Real Economy.In the cash market,rate cuts are seen as negative for the host currency(central banks don`t mostly cut rates unless the real economy shows signs of weakness)and a rate cut is a monetary policy tool deployed to stir up the economy once deflationary signs looms.

Traders don`t long rate cuts, they short it!

Ignored

Hi hitkgash, I know rate cuts cause shorts in the market on that specific currency. What i am however trying to say is that i do not see how other countries dealing with that specific country activating a rate cut would have their currency value decreasing. But perhaps i am thinking too much long term. Short term it is because economic developments were slowing down. In that sense initially other countries currencies would drop because a rate cut is a sign things are slowing down. Longer term however its the exact opposide. So in short i guess its a problem that deals with short and longer term perceptions.

Mar 1, 2015 2:39pm

From the monetary measures taken by PBOC,it is safe to think the Aussie may trade lower: If China is contracting and Australia sells them raw materials,it stands to reason that a contracting economy will not keep up a high level of raw materials purchases from Australia and that will in turn affect the Australian economy.

Bottom line,the aussie will tank on this.plus if the RBA cuts rate come Tuesday;more aussie sellers will join in and so deepen the depth of the drop-if on the other hand rates are held,then we may not see a steady drop.

Mar 1, 2015 2:47pm

Quoting Robertk

Disliked

Why the hell would Aussie drop as well? A rate cut improves exporting, making products cheap in comparison for Australia. Aud will only benefit from this because it stimulates trading between...

Ignored

Robertk,your take seems much like the long term benefit of rate cuts which is to stimulate the Real Economy.In the cash market,rate cuts are seen as negative for the host currency(central banks don`t mostly cut rates unless the real economy shows signs of weakness)and a rate cut is a monetary policy tool deployed to stir up the economy once deflationary signs looms.

Traders don`t long rate cuts, they short it!

Mar 2, 2015 3:34am

Quoting Robertk

Disliked

Hi hitkgash, I know rate cuts cause shorts in the market on that specific currency. What i am however trying to say is that i do not see how other countries dealing with that specific country activating a rate cut would have their currency value decreasing. But perhaps i am thinking too much long term. Short term it is because economic developments were slowing down. In that sense initially other countries currencies would drop because a rate cut is a sign things are slowing down. Longer term however its the exact opposide. So in short i guess its...

Ignored

Good Morning Robertk (at least itz morning where am reaching from). We are seemingly saying the same thing on this,but actually basing our reasoning on different time frames. I was reasoning on what the likely direction of the aussie would be at and around Sunday market open hour(and that is a short term time frame).

from what you said:"What i am however trying to say is that i do not see how other countries dealing with that specific country activating a rate cut would have their currency value decreasing". My point is, countries directly dealing with the country activating rate cuts can and mostly see the value of their own currencies decreasing(if they are major trade partners with the country cuting rates).If for instance,most of the income you make a living on depends on you selling diamonds to me,it goes without saying that you will not fare so well if for any reason I am forced to slash down the quantity of diamond i buy from you-why? because you will see your profit margin shrinking.the same applies to Australia,because a drop in China` mmanufacturing PMI would mean China is buying a less than usual quantity of raw materials from Australia which in turn means australia is exporting less and as such suffering a drop in international trade-such a scenario can weaken the australian dollar

Mar 2, 2015 3:55am

Quoting palabara

Disliked

eh not much of a gap on current price anyways on the aussie currently. Market doesn't seem to care either which way on this New month Sunday.

Ignored

Quoting palabara

Disliked

you bring a valid argument, but remember that this is a currency that is not the "host" rate cuts in china for Aussie will mean stimulus, and markets tend to rise on stimulus regardless of "why" its no secret china is shriveling up. Its no secret its housing bubble going to go KABOOOOOOM So the fact of the matter it is an opportunity and when opportunity dies out, the next step will be downside but to say that right now the market is so "logical" never works, because the market does not have the "long term consequences in mind" it focus on the moment!...

Ignored

Good Morning Palabara. Your reasoning is on point.rate cut is viewed as a stimulus,yes. but it has to be with a long term outlook in mind;in the short term it triggers a risk off sentiment in the market on the currency and the currency of another economy that mantains a strong correlation with it on the platform of international trade relations.

It will mostly be until the effect of the stimulus brought about by the rate cut begins to yield dividend by spurring up the real economy and making for more/better and or sustained biznez orders between the countries inter-woven in international trade that their currencies will strengthen-as we see in America...they started deploying rate cuts ahead of many other top economies and their dollar lost steam then,but now that their real economy has been stirred up on account of successive rate cuts along side other stimulus like the QE program,we all have seen how the dollar has strengthened as a result.

Feb 28, 2015 10:42pm

big gap on aussie when market open..

Mar 1, 2015 9:54am

NZD is next bitches.

Mar 1, 2015 3:48pm

eh not much of a gap on current price anyways on the aussie currently. Market doesn't seem to care either which way on this New month Sunday.

Mar 1, 2015 8:37am

Smart move or coincidence with Yellen move on not to hike IR in 2 FOMCs?

Mar 2, 2015 4:22am

Thanks for your explanations

Feb 28, 2015 6:59pm

Boom boom for Ausis

Mar 1, 2015 2:46am

gap up for aud and nzd and then go down. this is big news for hanseng. proove iiit

Mar 1, 2015 3:15am

affect for gbpaud
and curency asia market such us jpy, try, ( save heaven ). kospi. hanseng, ihsg, stait time, sgd. china no2 bigest economy on world

Mar 1, 2015 3:02am

how these rate cuts will affect GBP

Mar 1, 2015 11:51am

AUD/USD will gap up coz the rate cut of PBOC, then sell for target 0.75

Mar 2, 2015 4:39am

Quoting Robertk

Disliked

Thanks for your explanations

Ignored

Thanks for sharing

Mar 1, 2015 12:10am

The Aussie will go up temporary then go south, especially since there is a 50% change of a rate cut on Tuesday.

Mar 1, 2015 3:44am — Edited

AUDUSD will gap down guys , what are you analysing here .If there is a rate cut i means the currency drops , so because of the link betwen China and Aussie , if the Chinesse Currency drop , so does the Aussie .Another sorry state of affairs for Aussie
e.g
http://www.reuters.com/article/2014/12/23/markets-forex-idUSL6N0U70M020141223

http://www.investing.com/news/forex-news/forex---aussie-jumps-on-hsbc-china-pmi-as-it-expands-into-contraction-329506

Mar 1, 2015 4:03am

well, the RBA rate decision will be out on Tuesday -they may cut rates again like they did in January, so hold on to your hats!!! Remember Stevens wants it at 0.75 - and he has shown that he will act!!!

Mar 1, 2015 12:47pm

Quoting Robertk

Disliked

Why the hell would Aussie drop as well? A rate cut improves exporting, making products cheap in comparison for Australia. Aud will only benefit from this because it stimulates trading between...

Ignored

My idea is to hold till the RBA event ,then if there no rate cut ,here i think to buy AUD .

Mar 1, 2015 10:56pm

Quoting PA is King

Disliked

Are you guys sure it won't gap up? I mean, the Aussie rallied 200pips after the initial drop on RBA rate cut. The market has time to digest things before Sunday's open.

p.s. This is why I rarely hold trades over the weekends. News could get you bad if you guess wrong.

Ignored

Agree totally with you PA!

Have a question is anyone else having issues with the ffcal indicator today, getting an error cannot delete file....

Mar 1, 2015 6:10am

Short aususd. Target 0.70

Mar 1, 2015 7:48am

i think it will be up to .7950

Feb 28, 2015 7:08pm

welcome to 1250 on Gold next week

Feb 28, 2015 7:09pm

Good just what I needed for the Auss

Feb 28, 2015 9:18pm

Sell rallies.

Trader#0D91

Feb 28, 2015 10:03pm

Positive headlines, however, hard to tell which way the AUD will go.
The pace of rate cuts might be signalling that growth momentum has likely slowed (more than expected) in China due to negative fiscal shock. I think we can now expect government growth forecast to be lowered to 7% in the next NPC meeting (5th March).

There are rising risks of a mini-hardlanding in 2015. The downward pressure on growth is at its highest level since the global financial crisis in 2008. Property market faces structural oversupply. Fiscal revenue may grow at slowest pace since 1981, as land sale revenue plummets.

Trader#F363

Mar 1, 2015 5:21am

Quoting Ranmalpg

Disliked

well, the RBA rate decision will be out on Tuesday -they may cut rates again like they did in January, so hold on to your hats!!! Remember Stevens wants it at 0.75 - and he has shown that he will act!!!

Ignored

on the last aussie dip stevens was saying 0.85, and it just traded to 0.8650 iirc and then for some reason he stopped talking it down.

this is just a number for the market to sell towards while the bank picks up longs?

Mar 1, 2015 7:52am

Quoting yunyoungro

Disliked

i think it will be up to .7950

Ignored

On what analysis?

Mar 1, 2015 12:18pm

Quoting lakhan

Disliked

Short aususd. Target 0.70

Ignored

True , but i think not this time ,maybe we have to wait till the next cycle ,i like to short again around 0.82/3 .

Trader#8CF7

Feb 28, 2015 7:34pm

The Aussie will only rise temporary, it will then fall especially that on Tuesday there is a 50% chance of a rate cut.

Trader#66BC

Mar 1, 2015 3:51am

it seems like the aud is ready for a drop, this news and aud rate cut (probably) just adds up to the daily charts which are short especially on audusd and audjpy.

Trader#F363

Mar 1, 2015 5:12am

http://www.reuters.com/article/2014/11/21/markets-china-idUSL6N0TB1XS20141121

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