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As of 09:30 Beijing time, WTI crude oil futures rose 3.23%, while US natural gas futures fell 2.78%.The Peoples Bank of China (PBOC) announced today that it conducted 269.5 billion yuan of 7-day reverse repurchase operations, with both the bid and winning bids amounting to 269.5 billion yuan. The operating rate was 1.40%, unchanged from the previous rate.The main contract for the container shipping index (Europe route) rose 253.3 points during the day, currently trading at 2635.0 points, an increase of 10.64%.The yield on 30-year Japanese government bonds rose 4.0 basis points to 3.740%.On March 30, Atsushi Mimura, Japans top foreign exchange official, issued his strongest warning to speculators to date, stating that if current market conditions persist, authorities may need to take decisive intervention measures in the foreign exchange market. "We are increasingly aware that speculative activity is not only heating up in the crude oil futures market, but is also rapidly spreading in the foreign exchange market," Mimura said at a press conference on Monday. He emphasized, "If this trend continues, we believe that swift and decisive action may be imminent." Mimuras remarks came after the yen fell below the 160-dollar mark last week—the critical level at which the Japanese government plans to implement foreign exchange intervention in 2024. He added, "We are fully prepared to respond, with a broad and comprehensive monitoring scope," implying that the Japanese government is not only closely monitoring foreign exchange market movements but also simultaneously paying attention to related markets such as crude oil futures.

AUDUSD soars above 0.6660 prior to PBOC monetary policy announcement

Daniel Rogers

Nov 21, 2022 11:48

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The AUDUSD pair has climbed after finding support near 0.6660 during the early Asian session. Earlier, the asset saw declines as investors panicked over the People's Bank of China's interest rate decision (PBOC).

 

Lacking potential catalysts for significant action, the market's risk appetite remains muted. As investors anticipate the release of US Durable Goods Orders data, the dollar index (DXY) is encountering brief resistance near 107.00.

 

Raphael Bostic, president of the Atlanta Federal Reserve (Fed), anticipates that the 75 basis point (bps) rate hike regime will terminate in the near future, which might have a negative influence on the returns on US government bonds.

 

A Fed policymaker told Reuters on Saturday that he is prepared to "walk away" from three-quarter-point rate hikes at the December meeting of the Fed. To battle inflation, he claimed that the Fed's target policy rate will not climb by more than one percentage point. After then, the Fed would need to pause and "let the economic dynamics to play out," as it may take between 12 and 24 months for the impact of rate hikes to be "fully appreciated."

 

Monday's monetary policy announcement by the PBOC will be widely monitored. As economic forecasts have decreased due to the development of the Covid-19 virus, the Chinese central bank may adopt an expansionary stance. Moreover, sluggish real estate demand would require the injection of new cash into the economy. Notably, Australia is China's largest trading partner, and a decision by the PBOC to lower interest rates would benefit Australian bulls.

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