Forex News: Australian Dollar Rises After PBoC Interest Rate Decision

Australian Dollar Rises After PBoC Interest Rate Decision

(RTTNews) - The Australian dollar strengthened against other major currencies in the Asian session on Thursday, after the People's Bank of China maintained its benchmark lending rates for the sixth straight month.

The PBoC kept its one-year loan prime rate unchanged at 3.0 percent today. Similarly, the five-year LPR, the benchmark for mortgage rates, was retained at 3.50 percent. The decision came in line with expectations.

The bank had reduced its both LPRs by quarter points in October 2024 and 10 basis points each in May.

Sarah Hunter, the Assistant Governor of the Reserve Bank of Australia or RBA, remarked that "sustained above-trend growth could fuel inflationary pressures."

Hunter pointed out that the central bank won't respond to a single month's worth of data and that monthly inflation data can be erratic.

In order to determine supply capacity, she continued, the RBA is closely monitoring labor market circumstances and looking at how the implications of monetary policy might be evolving over time.

According to minutes from the RBA's November meeting, if economic data keeps improving, the central bank might hold rates steady for a long time.

The assumption that the easing cycle has probably ended has been reinforced by steady Q3 wage growth, last week's impressive jobs data, and consistently rising inflation.

Asian shares traded higher, boosted by strong gains in technology stocks after the sector regained confidence in the artificial intelligence trade on upbeat earnings results from chip giant and AI darling Nvidia. Traders also continued to pick up stocks at reduced levels following the significant weakness of the past few sessions.

Meanwhile, minutes of the US Fed's latest monetary policy meeting of late October revealed officials had expressed "strongly differing views" about the outlook for interest rates.

While the Fed said most participants agreed that it would be appropriate to eventually lower rates, several indicated that they did not necessarily view another 25-basis point rate cut as likely to be appropriate at the December meeting. Many participants suggested that it would likely be appropriate to keep rates unchanged for the rest of the year.

CME Group's FedWatch Tool is currently indicating a 32.8 percent chance the Fed will lower rates by another quarter point in December, down sharply from 93.7 percent a month ago. It also indicated a 67.2 percent chance of rates being unchanged.

In the Asian trading today, the Australian dollar rose to a 1-year high of 102.10 against the yen and a 6-day high of 1.7749 against the euro, from yesterday's closing quotes of 101.83 and 1.7809, respectively. If the aussie extends its uptrend, it is likely to find resistance around 103.00 against the yen and 1.75 against the euro.

Against the Canada and the New Zealand dollars, the aussie advanced to a 2-day high of 0.9117 and a 1-week high of 1.1572 from Wednesday's closing quotes of 0.9103 and 1.1563, respectively. The aussie may test resistance around 0.92 against the loonie and 1.16 against the kiwi.

The aussie edged up to 0.6491 against the U.S. dollar, from yesterday's closing value of 0.6479. On the upside, 0.66 is seen as the next resistance level for the aussie.

Looking ahead, Eurozone construction output for September is due to be released at 5:00 am ET in the European session.

At 6:00 am ET, the Confederation of British Industry releases Industrial Trends survey data for November. The UK order book balance is seen improving to -33 percent in November from -38 percent in October.

In the New York session, Canada PPI and raw material prices for October, U.S. jobs data for September, U.S. Philadelphia Fed manufacturing index for November, U.S. existing home sales data for October, U.S. Kansas Fed composite index for November and Eurozone flash consumer confidence for November is slated for release.

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