After the PBOC said it wouldn’t change its interest rate, AUDUSD is getting close to 0.6650. The Aussie falls because of China’s restrictions and the demand for the US Dollar.

The PBOC was “dovish” on Prime Lending Rates because of rising Covid-19 infections and weak demand for homes in China (PLRs). Domestic factors that hurt economic forecasts led to a rate cut. The Australian dollar, which is China’s biggest trading partner, has been unstable because the government hasn’t done enough to make money more available.

The RBA was happy with last week’s good employment numbers in Australia. The Australian Bureau of Statistics says that the economy added 32,200 jobs, which is more than the 15k expected and the 0.9k from before. The rate of unemployment went down from 3.6% to 3.5% to 3.4%. This could make the RBA more likely to raise the OCR right away.

The US dollar index (DXY) is over 107.00 and close to Tuesday’s high of 107.24. Risky currencies are affected when negative market sentiment comes back. As the chances of a 75-bps Fed rate hike have gone down, 10-year US Treasury rates have gone below 3.81%.
Investors will pay close attention to Philip Lowe’s speech on Tuesday. The monetary policy may be decided by the RBA Governor.

Conclusion

A small drop in the yields on US Treasury bonds has scared off US Dollar bulls, which helps the Aussie dollar.