China Best Bet, USA Stuffed
On Monday, the People’s Bank of China cut its one-year benchmark lending rate by 10 basis points and left its five-year rate unchanged, falling short of economists’ expectations for a 15 basis point cut to both.
“The market is still desperate to see rhetoric translated into significant action in terms of policy stimulus – it doesn’t meet the bill,” said a FX strategist
The Chinese rate cut widened the yield gap against the US, rendering the yuan even more vulnerable to a decline.
Chinese authorities have pledged to expand domestic consumption and support the private sector without detailing any new stimulus measures to bolster confidence as markets sink.
… but will they do what the technocrats want, or what Xi dictates? And as goes the yuan, so goes its liquid, tradable proxy.. the battlin’ AUD down 3c this month.
