Australian, Canadian And NZ Dollars Advance After PBoC Rate Cut

08:03, 21st November 2014

(RTTNews) - The Australian, Canadian and NZ dollars spiked up against their major rivals in European deals on Friday, as the People's Bank of China slashed interest rates to protect slowing economic growth.

The PBoC surprised markets by cutting the benchmark 1-year lending rate by 40 basis points to 5.60 percent and the 1-year deposit rate by 25 basis points to 2.75 percent. The rates were last cut in July 2012.

The rate cut will be effective from November 22.

The central bank also raised the deposit rate ceiling to 1.2 times of benchmark, from the 1.1 times at present. The move is designed to give lenders more control to set their interest rates.

The rate cut comes as the world's second largest economy is forecast to log its weakest growth in nearly 25 years.

The aussie strengthened to a 3-day high of 0.8721 against the greenback, 8-day high of 1.4256 against the euro and a 2-day high of 1.1003 against the NZ dollar, up from early lows of 0.8599, 1.4555 and 1.0931, respectively. The next possible resistance levels for the aussie are seen around 0.88 against the greenback, 1.42 against the euro and 1.105 against the kiwi.

The aussie spiked up to 102.83 against the yen, its strongest since April 22, while approaching a 2-day high of 0.9842 against the loonie. This may be compared to early lows of aussie of 101.47 against the yen and 0.9738 against the loonie. Extension of the aussie's uptrend may see it finding resistance around 103.6 against the yen and 0.99 against the loonie.

Reversing from early lows of 0.7846 against the greenback, 92.49 against the yen and 1.5962 against the euro, the NZ dollar advanced to a 3-day high of 0.7945, more than 7-year high of 93.66 and more than a 2-month high of 1.5643, respectively. Next resistance levels for the kiwi may be found around 0.80 against the greenback, 95.00 against the yen and 1.55 against the euro.

The Canadian dollar also firmed, reaching a 3-week high of 1.1256 against the greenback, off early low of 1.1325. If the loonie extends rise, it may test resistance around the 1.12 zone.

Having fallen to 1.4204 against the euro and a 2-day low of 103.87 against the yen in prior deals, the loonie moved up to a fresh 1-year high of 1.3982 and more than a 6-year high of 104.89, respectively. Extension of bullish move may lead the loonie to resistance levels of 106.00 against the yen and 1.39 against the euro.

Looking ahead, Canada's consumer price index for October is due shortly.

The Bank of England's David Miles speaks at the Festival of Economics in Bristol at 2:45 pm ET.