ForexLive Asia-Pacific FX news wrap: The PBOC bombshell announcement … that wasn’t

• People’s Bank of China Governor says yuan has a relatively solid and stable foundation
• ICYMI – PBoC says it will cut rates, but gave no indication of a timeline for when
• People’s Bank of China Governor says must support steady recovery of prices, economy
• PBOC sets USD/ CNY mid-point today at 7.0510 (vs. estimate at 7.0495)
• People’s Bank of China will soon cut 7-day reverse repo to 1.5% from 1.7%
• People’s Bank of China will soon cut reserve requirement ratio by 50bp
• AUD traders heads up – Australian Treasurer Chalmers press conference after RBA
• Morgan Stanley prefers Chinese stocks trading offshore over those listed on the mainland
• Japan Jibun preliminary Sep PMIs: Manufacturing 49.6 (prior 49.8) Services 53.9 (53.7)
• Reserve Bank of New Zealand give a heads up on when Governor Orr is speaking next
• Australian weekly consumer confidence survey hits its highest since January 2023
• Japan – tsunami alert issued after earthquake
• China’s youth unemployment rate hit a fresh high in the latest data
• 3 forecasts for the first RBA rate cut: December ’24, February, May ’25
• Reserve Bank of Australia meeting today – preview – on hold expected
• UK PM Starmer is speaking on Tuesday – will say tough decisions are needed
• JP Morgan sees US equities higher still – plenty of supportive macro
• 3 reasons there are still higher prices to come for Gold – UBS target US$2700
• Forexlive Americas FX news wrap 23 Sep: S&P Global PMI data mixed but with inflation
• Swiss National Bank meet this week – consensus expectation is for a 25bp interest rate cut
• S&P and Dow industrial average close at record levels
• Trade ideas thread – Tuesday, 24 September, insightful charts, technical analysis, ideas

PBOC
governor Pan Gongsheng, NFRA* director Li Yunze, and
CSRC*
president Wu Qing joined
forces for a 9 am (Beijing time) press conference that generated
bombshell monetary policy stimulus headlines that were subsequently
withdrawn.

The Governor of the People’s
Bank of China was reported (erroneously) as saying the Bank had:

• cut
  the Reserve Requirement Ratio (RRR) by 50bp,
• cut
  the 7-day Reverse Repo rate to 1.5%, from 1.7%

What
the governor actually said was that the Bank will, at some time, make
these
cuts. He did not offer a firm timeline. The cuts are something the
Bank will do, but not right away. Unfortunately the headlines
reported the cuts as having been made, which was incorrect.
Thankfully ForexLive reported the correct news.

However,
the misreporting was seized upon by traders thirsting for stimulus
from China, with stocks jumping higher. There
has been retracement but Chinese stocks are net higher on the
session. AUD/USD also jumped and is now mid-range for the session as
I post.

Other
measures announced (with no time line) at the Chinese press conference included:

• will
  cut down payments for 2nd homes
• will
  cut outstanding mortgage rates for individual borrowers by an average
  of 0.5%
• will
  allow funds and brokers to tap PBoC funding to buy stocks
• MLF
  will be lowered by 0.3%
• LPR
  will be lowered by 0.2 to 0.25%

The
“will allow funds and brokers to tap PBoC funding to buy stocks”
garnered much attention. A fund to stabilise equity markets is, of course, bullish for China stocks, but we await
more detail on this.

Otherwise
news and data flow was fairly light.

Still to come is the Reserve Bank of Australia statement and Governor
Bullock’s press conference. The RBA is widely expected to leave the
cash rate unchanged today.

And,
still more to come, is Bank of Japan Governor Ueda speaking at a
meeting with Business Leaders in Osaka (0105 US Eastern time, 0505
GMT).

—

*NFRA
is China’s National
Financial Regulatory Administration

*CSRC
is the China Securities Regulatory Commission

—

Shanghai Composite hourly

This article was written by Eamonn Sheridan at www.forexlive.com.