Certainly the move higher has been assisted by better sentiment towards China of late, with comments from Premier Li Keqiang late last week that the PBOC would ‘fine tune’ policy. We also saw that the PBOC provided a RMB 100 billion loan through its re-lending facility to the China Development Bank, while offering a further RMB 200 billion over the next two months to assist with the shanty town renovation. There has been a noticeable pick up in accommodative rhetoric from the PBOC, and clearly this is aimed at providing support at a time when there are increasing concerns around China’s property market.
Further narrative from Chinese officials could feasibly transcend into further AUD strength, although it’s worth bearing in mind that iron ore and gold look technically weak.
On the other side of the equation, the USD is not getting much love, with US bond yields continuing to fall, subsequently lowering the appeal of the USD. There is a limited data to drive trade tonight, while in Australia today’s Westpac leading index is not expected to materially impact the AUD.
The post non-farm payrolls low of 0.9203 still seems to be key support, and a break of this level is clearly needed for the pair to trade to my objective.