ForexLive Asia-Pacific FX news wrap: The PBOC cut rates by much less than expected

• Chinese property firm Country Garden set to be removed from Hong Kong’s Hang Seng Index
• AUD/USD at risk of dropping under 0.60 (unless China stimulates, big time)
• UBS see limited catalysts that could outweigh the USD/JPY carry trade
• AUD and NZD marked lower after the People’s Bank of China rate cut is less than expected
• People’s Bank of China sets USD/ CNY reference rate today at 7.1987 (vs. estimate 7.2893)
• PBOC Loan Prime Rates (LPR) CUT: 1-year 3.45% (prior 3.55%) & 5 year 4.2% (prior 4.20%)
• Brent: China’s weak economy & property debt implosion is weighing, but oil use holding up
• Fed Chair Powell at Jackson Hole, BoA expect him to pushback against rate cut expectations
• Goldman Sachs is not expecting a strong signal from Federal Reserve Chair Powell this week
• MUFG stays short EUR/USD in its trade of the week – targeting a drop under 1.08
• New Zealand July exports dropped on the month while imports rose
• Wall Street Journal Fed insider Timiraos expects higher Fed ‘neutral’ rate ahead
• Previewing the week ahead in financial markets. TL;DR version is NVDA earnings vs. Powell
• ICYMI – Japan to boost the minimum wage, “largest increase” ever
• ICYMI – Nomura slashed their China GDP forecast for 2023 to 4.6% (from 5.1%)
• Weekend – the PBOC met with bank executives and told lenders, again, to boost loans
• Trade ideas thread – Monday, 21 August 2023
• Monday morning open levels – indicative forex prices – 21 August 2023
• A review of the technicals driving the different currency pairs (and more)
• Weekly Market Outlook (21-25 August)
• Newsquawk week ahead: Jackson Hole, PBoC LPR, Flash PMIs, CBRT, Japan’s Tokyo CPI
• Forexlive Americas FX news wrap 18 Aug: Nasdaq and S&P close lower for 3rd week in a row

China’s
central bank, the
People’s Bank of China, cut
the one-year loan prime rate from 3.55% to 3.45%, while the
five-year LPR, which serves as the basis for housing mortgage rates,
remained unchanged at 4.20%. Reuters poll of 35 analysts
showed all
had
expected cuts
to both rates, after the
Bank unexpectedly
lowered the medium-term lending facility rate last week. Widespread
expectations were for 15bp cuts to each, so the 10 and zero that were
delivered were received with disappointment by the market.

The
initial response was for lower ‘risk’, in the major FX space this
meant a marking down for AUD and NZD, but EUR and GBP were down a
little also. This all soon reversed though.

Chinese
mainland and Hong Kong equities dropped also, but have bounced from their session lows.

Oil
shrugged it off, Brent has risen nearly a dollar on the day.

Asian
equity markets:

• Japan’s
  Nikkei 225 +0.95%

• China’s
  Shanghai Composite -0.15%

• Hong
  Kong’s Hang Seng -0.66%

• South
  Korea’s KOSPI +0.6%

• Australia’s
  S&P/ASX 200 -0.07%

Brent oil: