The People’s Bank of China announce a cut in the Reserve Requirement Ratio by 0.5%. According to the authorities in Beijing, the move is meant to provide more liquidity in the financial system and to help create the appropriate monetary environment to support supply side reform.
This extra stimulus is good news for the Australian dollar on the eve of a very busy session.
The Reserve Bank in Australia is expected to leave rates unchanged once again, but perhaps open the door to cuts later this year. Beforehand, data from China will dominate: manufacturing PMI from both the government and from the independent Caixin institute will move markets.
Did China preempt weak data?
The Australian dollar bounced from the lows around 0.7115 to 0.7168, but seems to struggle holding these highs. 0.7140 serves as support, but it is quite weak. Further support awaits at 0.7040. Resistance is at 0.7220 and 0.7280.
Here is how it looks on the AUD/USD chart:
