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HK HSI jumps after PBoC rate cut, heading back to 26k

China’s PBoC cut the one year loan prime rate by 10 bps to 3.70%. The second rate cut since April 2020 following December’s. Five-year loan prime rate was lowered by 5bps to 4.60%, first cut since April 2020. Along with the rate cuts, PBoC also injected more liquidity to the markets by offering CNY 700B of one-year loans, exceeding the CNY 500B maturing.

Hong Kong HSI responds positively to the news and it’s trading up 2.5% at the time of writing. Resumption of the rise from 22655.25 after notably support from 55 day EMA is a bullish sign, along with bullish convergence condition in daily MACD. Current rise should at least be correcting the down trend from 31183.35, with prospect of even reversing it. Further rally is now in favor back to 38.2% retracement of 31183.35 to 22665.25 at 25919.16, which is close to 26k handle.

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