European Open: The PBOC cut lending rate, EUR/CHF set for new lows?
Matt Simpson August 22, 2022 6:02 AM
The PBOC lifted China’s equity markets and commodity FX pairs with another round of easing, aimed at supporting their flailing property market.
- Australia's ASX 200 index fell by -68.7 points (-0.97%) and currently trades at 7,045.80
- Japan's Nikkei 225 index has fallen by -160.83 points (-0.56%) and currently trades at 28,769.50
- Hong Kong's Hang Seng index has risen by 39.49 points (0.2%) and currently trades at 19,812.52
- China's A50 Index has risen by 120.08 points (0.88%) and currently trades at 13,730.36
UK and Europe:
- UK's FTSE 100 futures are currently down -6.5 points (-0.09%), the cash market is currently estimated to open at 7,543.87
- Euro STOXX 50 futures are currently down -7 points (-0.19%), the cash market is currently estimated to open at 3,723.32
- Germany's DAX futures are currently down -23 points (-0.17%), the cash market is currently estimated to open at 13,521.52
- DJI futures are currently down -145 points (-0.43%)
- S&P 500 futures are currently down -72 points (-0.54%)
- Nasdaq 100 futures are currently down -19 points (-0.45%)
Equity markets were mixed overnight, with the ASX 200 falling around -0.8% and dragged lower by commodity stocks, and the Nikkei was down around -0.3%. Yet China’s equity markets posted minor gains following further easing from the PBOC (People’s Bank of China).
The PBOC cut lending rates again to help support the property sector. The 5-year LPR (Loan Prime Rate) was cut by -15bp to 4.3%, and the 1-year was cut -5bp to 3.65%. USD/CNH rose to a 23-month high but has since dipped back beneath Friday’s high.
The US dollar remains supported following hawkish comments from another Fed official on Friday, with Thomas Barkin saying the “urge” for central bankers was towards faster rate increases. However, AUD and NZD were the strongest majors following the PBOC’s latest round of easing. The yen was the weakest currency overnight, allowing USD/JPY to trade higher for a fifth consecutive session and test the July 27th high.
EUR/CHF daily chart:
A strong bearish trend has developed on the daily chart of EUR/CHF. Retracements have been timely and the trend has remained beneath the 20-day eMA since prices broke through trend support in June. The break below 0.9700 ha now respected this previous support level as resistance, and prices are considering a break to new lows. A break beneath 0.9600 (and the monthly S1 pivot) assumes bearish continuation and brings the 0.9500 support zone into focus for bears. Bears could also consider fading into minor retracements whist prices remain beneath 0.9700, in anticipation of an eventual break lower.
FTSE 350 – Market Internals:
FTSE 350: 4193.31 (0.11%) 19 August 2022
- 70 (20.00%) stocks advanced and 264 (75.43%) declined
- 7 stocks rose to a new 52-week high, 9 fell to new lows
- 34.57% of stocks closed above their 200-day average
- 100% of stocks closed above their 50-day average
- 3.43% of stocks closed above their 20-day average
- + 2.48% - Bank of Georgia Group PLC (BGEO.L)
- + 2.46% - Reckitt Benckiser Group PLC (RKT.L)
- + 2.14% - AstraZeneca PLC (AZN.L)
- -10.19% - Marshalls PLC (MSLH.L)
- -6.48% - Genuit Group PLC (GENG.L)
- -6.29% - Easyjet PLC (EZJ.L)
Economic events up next (Times in BST)
How to trade with FOREX.com
Follow these easy steps to start trading with FOREX.com today:
- Open a Forex.com account, or log in if you’re already a customer.
- Search for the pair you want to trade in our award-winning platform.
- Choose your position and size, and your stop and limit levels.
- Place the trade.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.