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The PBoC Holds Loan Prime Rates Steady on a Quiet Day on the Economic Calendar

The PBoC left LPRs steady this morning, with some time likely needed to asses the impact of recent cuts and the phase 1 agreement.
Bob Mason
Pudong New Area skyline in Shanghai, China.

Earlier in the Day:

It was a relatively quiet day on the Asian economic calendar this morning. While key stats are limited to finalized industrial production figures out of Japan later, the PBoC was in action early on.

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Out of China

The PBoC held back from providing further support at the start of the year, leaving both the 5-year LPR and the 1-year unchanged at 4.8% and 4.15% respectively.

Expectations had been for the 5-year LPR to be cut to 4.7%, with the 1-year to 4.05%.

The Aussie Dollar moved from $0.68807 to $0.68793 in response to the cut. At the time of writing, the Aussie Dollar was up by 0.01% to $0.6880.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.05% to ¥110.20 against the greenback, while the Kiwi Dollar was up by 0.05% to $0.6618.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar, with wholesale inflation figures for December due out of Germany.

Barring a material deviation from forecasts, the numbers are unlikely to have too much influence on the EUR.

Late in the day, ECB President Lagarde is scheduled to speak, however, and could provide direction overnight. With the U.S markets closed and volumes on the lighter side, any monetary policy chatter will influence.

At the time of writing, the EUR was up by 0.04% to $1.1096.

For the Pound

It’s a quiet day ahead on the economic calendar, with no material stats due out of the UK to provide the Pound with direction.

With 1-week remaining until Britain leaves the EU and a string of weak stats from last week raising the chances of a BoE rate cut, there’s unlikely to be too much upside for the Pound.

There is one silver lining, however. Trump could begin to target the EU on tariffs. This could make a trade relationship between Britain and the EU all the more important for the EU…

At the time of writing, the Pound was down by 0.12% to $1.3001.

Across the Pond

It’s a quiet day on the data front, with the U.S markets closed.

The Dollar Spot Index was up by 0.01% to 97.611 at the time of writing.

For the Loonie

It’s also a quiet day on the economic calendar, with no material stats due out of Canada to provide the Loonie with direction.

With the USMCA now awaiting Trump’s signature, upbeat business sentiment could leave the BoC in a holding pattern near-term.

GDP numbers will need to start improving, however, for the Loonie to find its way back to sub-C$1.30 levels against the Dollar.

The Loonie was down by 0.01% at C$1.3067 against the U.S Dollar, at the time of writing.

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