Asian Markets Wary Ahead of PBoC Rate Decision

Investor sentiment in the Asian markets was wary in overnight trading amid uncertainty over the People’s Bank of China (PBoC) interest rate decision on Wednesday.  

Earlier in the week, China announced its GDP growth for the first quarter was better-than-expected at 4.8 percent on an annual basis.  Sentiment in the world’s second largest economy is nonetheless clouded by COVID-19 outbreaks and risks from the conflict in Ukraine.  

The PBoC cut its reserve rate requirement for China’s banks by .25 basis points to support the country’s economic recovery, but a question mark still hangs over the prime rate decision due out on April 20.  

In other central bank themes, the Swiss National Bank (SNB) Chairman Jordan speaks today, with potential market-moving effects on the CHF currency crosses. The SNB and PBoC remain dovish in their interest rate policies but the Federal Reserve is fighting the same inflation fires in crude oil prices that may spread into China’s and Switzerland’s economies. It may not be a question of if, but a question of when the SNB and PBoC have to raise their own key rates to keep inflation in line.  

There’s more market-moving news this week in Canada, which releases inflation results for March on Wednesday. Consumer price figures were at 4.8 percent in February and are expected to be at the level of 5 percent in March. Any disappointments or surprises in Canada’s CPI may move the CAD currency pairs.  

Finally for inflation trading news, New Zealand releases year-on-year CPI figures for the first quarter on Wednesday. The inflation rate is expected to have risen to 7.1 percent from 5.9 percent in the previous reading, prompting the Reserve Bank of New Zealand to raise its official cash rate to 1.5 percent. The news on Wednesday may move the NZD currency pairs.  

The key news for stock market investors includes first-quarter earnings from large caps Johnson & Johnson, Netflix and Lockheed Martin Corp.  

This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.