Foreign exchangeLive Asia-Pacific FX information wrap: The PBOC bombshell announcement … that wasn’t

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withdrawn.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