ForexLive Asia-Pacific FX news wrap: A series of easings from the People’s Bank of China

• Bank of England Executive Director, Markets, speak Monday on its balance sheet
• The money taps have been turned on again for the Democrats since Biden’s announcement
• PBOC sets USD/ CNY reference rate for today at 7.1335 (vs. estimate at 7.2624)
• China cuts 1 and 5 year loan prime rates by 10 basis points each
• PBOC cut 7-day rates, eased requirements for 1 year MLF loans. LPS ahead – a cut looming?
• PBOC to lower collateral for Medium-term Lending Facility (MLF) loans
• PBoC announces cut to 7-day reverse repo rate to 1.70% from 1.80%
• Federal Open Market Committee (FOMC) blackout period began on the weekend
• Unnamed sources say that all 50 Democratic US State Chairs back Harris
• Trouble for China hedge funds? Reuters: Brace for upheaval from tough new rules
• New Zealand trade balance for June is a 699mn NZD surplus (prior +54mn)
• Updated US Presidential election odds: Trump 61%, Harris 31%
• The days ahead could bring some unwind of the ‘Trump ‘ trade
• Early Monday FX rates – 22 July 2024 – US dollar little changed after Biden pulls out
• Trade ideas thread – Monday, 22 July, insightful charts, technical analysis, ideas
• Monday morning open levels, indicative FX rates 22July2024, little change from late Friday
• It’s finally Joever
• Newsquawk Week Ahead: Highlights include US PCE, BoC, PBoC LPR, PMI’s and Tokyo CPI
• Weekly Market Outlook (22-26 July)
• How would the bond and FX markets react to Biden dropping out of the race?
• Buying FTSE China A50 index (XIN9) on the monthly chart
• Heads up for China rate setting coming up on Monday

Politics
was the bombshell news to open the week. US President Biden pulled
out of the 2024 contest early on Sunday afternoon, US time, well
prior to Asian markets opening. Very early pricing was not overly
volatile, early NZ saw the US dollar drop a little. EUR, AUD, NZD,
GBP, CAD and even JPY gained a few tics or so. As more Asian centres
came towards being online, Australia, Japan, then Hong Kong and
Singapore (these final two are in the same time zone) the losses for
the USD extended further, but the moves were not large, not at all.
US equity index markets opened (Globex on the CME) with ES and NQ up
also.

Over
the course of the morning the USD bottomed out and all those
currencies just mentioned gave back their gains. The biggest loser of
the lot was the AUD, which dropped 35+ points from its early high.

The
next item of any note to hit was a series of easings from the
People’s Bank of China:

• the
  PBOC cut the rate on its 7-day reverse report from 1.8% to 1.7%, the
  first cut since August last year
• at
  the same time the PBOC promised support for the CNY, saying it’d
  strengthen the counter-cyclical adjustment to “better support
  the real economy”
• the
  PBOC then announced it was lowering collateral requirements for
  medium term lending facility loans, the move is aiming to increase
  the size of tradable bonds in the market
• the
  PBOC followed up with a 10bp cut to each of the one- and five-year
  loan prime rates

On
the LPRs, the
one-year rate has been cut to 3.35%

• prior
  3.45%

The
five-year rate has been cut to 3.85%

• prior
  3.95%

USD/CNH
traded higher, but again its not a huge move.

This article was written by Eamonn Sheridan at www.forexlive.com.