PREVIOUS TRADING DAY EVENTS 21 August 2023

Chinas central bank, the Peoples Bank of China PBOC, lowered the oneyear Loan Prime Rate LPR or benchmark lending rate to 3.45 from the previous 3.55 in an attempt to stimulate credit demand. However, it surprised markets by keeping the fiveyear rate unchanged, the fiveyear LPR was left at 4.20.

Probably China limited the size and scope of rate cuts because they are concerned about downward pressure on the yuan, said Masayuki Kichikawa, chief macro strategist at Sumitomo Mitsui DS Asset Management. Chinese authorities care about currency market stability.

The yuan became one of the worstperforming Asian currencies.

We interpret the status quo of fiveyear LPR as a signal that the Chinese banks are reluctant to cut rates at the expense of rate differential margin, said Ken Cheung, chief Asian FX strategist at Mizuho Bank.

The central bank stated that it will optimise credit policies for the property sector while coordinating financial support to resolve local government debt problems.

Source httpswww.reuters.comworldchinachinacuts1yearlendingbenchmarkkeeps5yearunchanged20230821

Winners vs Losers

AUDJPY is taking the lead this week having 1.06 price change. It is followed by the other JPY pairs having JPY as quote currency suggesting that the JPY is getting hit.
The USDJPY and USDCAD however, are still on the top of the months winners list with approx. 2.6 gains each.

News Reports Monitor Previous Trading Day…