Skip to content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
Oil - US Crude
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Australian Dollar Eyes PBOC Rate Cuts Amid Protracted China Power Woes

Australian Dollar Eyes PBOC Rate Cuts Amid Protracted China Power Woes

Thomas Westwater, Analyst

Australian Dollar, AUD/USD, China, PBOC, Rates, Technical Outlook - TALKING POINTS

  • APAC markets set to open the week on shaky ground after China extends power cuts
  • The People’s Bank of China (PBOC) is expected to slash two key lending rates
  • AUD/USD’s technical posture points to more losses after a big 3.5% weekly drop
How to Trade AUD/USD
How to Trade AUD/USD
Recommended by Thomas Westwater
How to Trade AUD/USD
Get My Guide

Asia-Pacific markets look vulnerable after Wall Street traders closed the week on the back foot, with equity losses accelerating on Friday in New York. The benchmark S&P 500 fell 1.21%, and the high-beta Nasdaq-100 (NDX) closed 2.38% lower. A large number of options, around $2 trillion worth, expired on Friday, likely bolstering volatility.

Sichuan province, one of China’s most populous, extended power rationing across the region amid extreme heat and drought. Factories and other industrial plants are to remain closed until August 25, extending the original order by five days. The protracted industry shutdown will likely add to the economic headwinds from sporadic Covid lockdowns and could even reverse some progress made on congested supply chains.

According to a Bloomberg survey, the People’s Bank of China (PBOC) is expected to cut its 1- and 5-year loan prime rates today. Credit growth has been lackluster recently, likely underpinning the central bank’s commitment to easing policy. The PBOC unexpectedly cut several other lending rates last week. China’s property sector is another problem still looming over the economic powerhouse. AUD/USD fell 3.5% last week. Currency traders increased their net short position on AUD, according to the latest CFTC data.

An eight-day strike at the United Kingdom’s Felixstowe port started on Sunday, threatening to inflict further damage on global supply chains and adding to Europe’s price pressures. PMI readings for the United Kingdom’s services and manufacturing sectors are due. Analysts expect to see both gauges remain in expansion for July but fall from the prior month.

Introduction to Forex News Trading
Introduction to Forex News Trading
Recommended by Thomas Westwater
Introduction to Forex News Trading
Get My Guide

AUD/USD Technical Outlook

AUD/USD’s technical positioning doesn’t offer an optimistic view. The currency pair set a fresh August low last week, although the 61.8% Fibonacci retracement level provided some support but only after an already big move. The 50-day Simple Moving Average was broken shortly after RSI crossed below its midpoint. The MACD oscillator is also on track to cross below its own midpoint, another bearish sign.

AUD/USD Daily Chart

aud-usd

Chart created with TradingView

Trade Smarter - Sign up for the DailyFX Newsletter

Receive timely and compelling market commentary from the DailyFX team

Subscribe to Newsletter

--- Written by Thomas Westwater, Analyst for DailyFX.com

To contact Thomas, use the comments section below or @FxWestwater on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES