New stimulus in China | 15 4月 2022

15 4月 2022, USD/JPY

New stimulus in China

USDJPY trading plan:

China's explicit call to cut the amount of cash banks set aside as reserves and boost lending has reinforced expectations for imminent policy easing. Growth in the world's second-largest economy has slowed since early 2021 as traditional engines of the economy such as real estate and consumption faltered. Exports, the last major growth driver, are also showing signs of fatigue. The State Council, or cabinet, said after a meeting that monetary policy tools - including cuts in banks' reserve requirement ratios - should be used in a timely way. Most traders now expect an RRR cut of 50 basis points, which would free up more than 1 trillion yuan in long-term funds that banks can use to boost lending. This is a good signal for the stock market and USDJPY, which has a correlation with the shares.

Investment idea: buy 126.29 and take profit 126.95.

David Johnson
Analyst of «FreshForex» company
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