March 26, 2023
Market update | 20 December 2022
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Market update | 20 December 2022

Tuesday started with a focus on three central banks in Asia. In Australia, Reserve Bank released its meeting minutes, the Bank of Japan surprised investors, and PBoC was predicted.

Minutes of the Australian Reserve bank December meeting show that there is no consensus for further decisions. However, most RBA members still support the pause in the rate hike process. These comments from policymakers in rate decision meetings cause more pressure on the Australian dollar. AUDUSD breached the key pivot and support at 0.6687, and from the technical point of view, it is entering into a downtrend after soft-bullish moves.

Weaker USD after BoJ and PBoC

While China is again facing an unprecedented surge in COVID cases, PBoC is trying to keep the balance between facilitating economic growth and stemming further yuan weakness, which can increase the cost of importing raw materials. People Bank did not change its one-year and five-year loan prime rates in China at 3.65% and 4.30%, respectively, and at historic lows. As was widely expected did not affect the Yuan itself, while due to the weaker USD, USDCNH fell about 0.5% towards 6.95.

After the October intervention to support its currency in Japan, the central bank’s meeting and surprising announcement raised the Yen to its almost four-month high against the USD. After long-term dovish policies, we now have signs of the end of the country’s ultra-accommodative monetary policy, much earlier than expected.

BoJ maintained its benchmark rates at near-zero as widely expected but raised the range for yield fluctuations in the benchmark government bonds, from negative 0.25% to 0.25%, to 0.5% and 0.5%.

After the BoJ meeting, USDJPY fell under 132.40, losing more than 3.3% to test the 4-month low, and from the technical point of view, the pairing moved in a clear downtrend, with the following support sitting at 131.15.

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