Friday’s currency ranges were not large. Overall, the NZD outperformed while the JPY was the weakest currency. Over the weekend the People’s Bank of China announced a 25bp cut to both the 1yr lending rate (to 5.35%) and the deposit rate (to 2.5%). This follows the cut to the RRR on 4 Feb. Our Asia strategist believes that China’s easing cycle will likely continue with further cuts in coming week’s/months. She expects the USD/CNY to trade towards 6.30 by end-Q1. History suggests this would likely be associated with AUD weakness. We would therefore look to fade any knee-jerk AUD gains today. The AUD/USD ended last week at 0.7810.
Read the full report: FX Daily