Technical Bias: Bullish
- AUDUSD holds ground following PBOC interest rate cut over the weekend.
- Sluggish China CPI raises the prospect for a fourth interest rate cut.
- AUDUSD bullish above 0.7900.
The AUDUSD was little changed in Monday’s Sydney session after China cut interest rates for the third time in six months, as weak CPI data suggested more stimulus may be on the way in the near future.
The AUDUSD was trading at 0.7929 after falling below the 80.00 level last Thursday. The pair is supported at 0.7873. Initial resistance is likely found at 0.7980. The AUDUSD has been in bullish territory since bottoming out below 0.7600 in April.
The daily chart continues to show bullish momentum ahead of National Bank of Australia’s business confidence index, which will be released at 1:30 GMT.
China Inflation Slows Again in April
China’s consumer price index (CPI) declined unexpectedly in April, falling 0.2 percent, Beijing’s national Bureau of Statistics reported on Saturday. In annual terms, China CPI was up 1.4 percent. China will issue industrial production and retail sales data on Wednesday.
Sluggish inflation raises the prospects of another rate cut by the PBOC. Beijing cut interest rates for a third time in six months over the weekend, trimming the benchmark rate by 25 basis points to 5.1 percent.
“Currently, the pace of economic restructuring is quickening and the fluctuation of external demand is relatively big,” the PBOC said in a statement. “China’s economy is still facing relatively big downward pressure.”