Menu
Brokers
MT4 Forex Brokers
MT5 Forex brokers
PayPal Brokers
Skrill Brokers
Oil Trading Brokers
Gold Trading Brokers
Web Browser Platform
Brokers with CFD Trading
ECN Brokers
Bitcoin FX Brokers
PAMM Forex Brokers
With Cent Accounts
With High Leverage
Cryptocurrency Brokers
Forums
All threads
New threads
New posts
Trending
Search forums
What's new
New threads
New posts
Latest activity
Log in
Register
Search
Search titles only
By:
Search titles only
By:
Menu
Install the app
Install
Reply to thread
Forums
Forex Discussions
Forex News
Intraday Analysis by Forexsoup
JavaScript is disabled. For a better experience, please enable JavaScript in your browser before proceeding.
You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an
alternative browser
.
Message
[QUOTE="forexsoup, post: 17422, member: 8662"] [b]China Raises Key Interest Rate; Highly Correlated Aussie Takes A Dive[/b] The Chinese central bank, the People’s Bank of China (PBOC), raised its key interest rates for the third time since mid-October in a bid to bring inflationary pressures under control. The benchmark one-year lending rate will increase to 6.06% from 5.81%, effective tomorrow. The one-year deposit rate will rise to 3% from 2.75% the PBOC said on its website today. A rate hike in Q1 had been expected and rhetoric suggesting so from Chinese officials had supported the idea. Li Daokui, an adviser to the central bank, had recently said that it would be “understandable” if interest rates would rise as part of adjustments to policy during the quarter. Li went on to say that he expects policy to focus more on inflation and less on maintain fast economic growth. Consumer prices rose 4.6% in December and the economy expanded 9.8% in Q4, faster than the pace of the previous quarter. Many consumers have also expressed concern about rising prices as companies across the economy raise prices and pass on costs to consumers. In a survey released by the PBOC in December, 61% of respondents believe consumer prices will be higher next quarter (Q1 2011) than they currently are. The survey also showed confidence that prices will remain in check is now at its lowest level in 11 years. The highly correlated Australian dollar was immediately lower against the dollar, virtually erasing today’s gains. The Australian dollar is perceived to be the most exposed to the Chinese economy with a large portion of Australia’s resource exports heading to China. Any slowdown in Chinese growth would certainly be felt by the Australian economy and its currency. The raising of interest rates in China is generally seen to be risk averse since it could slow growth, any slowdown in Chinese growth is viewed to be negative for global growth. At a time when many nations are still recovering from recessions a slowdown in global growth could knock many back into recession. However, it is our opinion that the rate of growth in China at present is unsustainable and a slowing of growth toward a more sustainable annual rate of 8.5-9% would in fact be better for global growth since it will remove the risk of over-heating. Across the wider FX market the response was muted, the commodity bloc, viewed as the most exposed to China, dipped modestly on shorter-term charts but on the day generally were little changed. Turning to the majors, the normal risk averse reaction did not follow after today’s hike, since it was largely expected and it is understood the PBOC has to act to tackle inflation, and most currencies remained bid against the USD. More By Forexsoup [/QUOTE]
Insert quotes…
Verification
Post reply
Top
Bottom
This site uses cookies to help personalise content, tailor your experience and to keep you logged in if you register.
By continuing to use this site, you are consenting to our use of cookies.
Accept
Learn more…