NZD/USD Rebounds Following PBOC
NZD/USD rebounds following PBOC actions. People’s Bank of China stimulus often boosts risk sentiment. This supports commodity currencies like NZD. The rebound shows renewed buying pressure against USD.
Perhaps, not surprisingly, it has been the Aussie and Kiwi which have responded the most to the PBOC (People’s Bank of China) move to devalue the yuan, with the AUD/USD completely erasing last Friday’s and Monday’s gains to end yesterday’s trading session just over the key 0.73 level. Further falls overnight has seen the pair tumble to 0.7224 since when it has staged a remarkable comeback in the London session to trade (at time of writing) at 0.7330. The move off the session lows has also co-incided with our last VPOC supoort line on both the daily and weekly charts. On the daily chart the first target for AUD/USD is the VPOC resistance at 0.7395, followed by further resistance at 0.7438, and yesterday’s high.
However, the extent of the comeback for both pairs can be seen on the hourly charts where it has been the NZD/USD which has proved the stronger of the two with the decisive move away from the VPOC line at 0.6541 on good, solid volume. This acceleration away this price point has also been reflected in the Currency Matrix where on the hourly chart the NZD/USD is the strongest pair, at time of writing.
The pair is now attempting to move through resistance in the 0.6616 region which also co-incides with a high volume node on the VPOC, and here the pair may struggle as it attempts to regain and test yesterday high at 0.6633. And once again it will be volume which will determine whether this level is achieved.
Volume Price Analysis Insights
Volume price analysis (VPA) confirmed the rebound. High volume on up candles signaled conviction. Low volume earlier marked exhaustion in sellers. Quantum currency strength indicator highlighted NZD outperformance post-news.
Trading Implications
PBOC-driven rebounds favor long NZD/USD positions. Watch for continuation on pullbacks. Anna Coulling’s VPA approach with Quantum tools spots these sentiment shifts early for timely entries.
NZD/USD rebounds like this reward relational traders. Use Quantum indicators to navigate news-driven volatility confidently.
How the Chinese Yuan Is Pegged and Why PBOC Decisions Matter to Forex Traders
The Chinese yuan (CNY, also RMB) is unique among major currencies. It’s not freely floating. The People’s Bank of China (PBOC) manages it closely. This “managed peg” influences global forex markets. Traders watch PBOC decisions for clues on CNY strength and broader sentiment.
How the Yuan Peg Works
Since 2005, China shifted from a strict USD peg. Now it’s a managed floating exchange rate against a basket of currencies.
- Daily Midpoint Fixing: PBOC sets a central parity rate (midpoint) each day against USD. This is announced before markets open.
- Trading Band: Onshore CNY (CNY) can fluctuate ±2% around the fixing. Offshore CNH has wider freedom.
- Currency Basket: Includes USD (heavy weight), EUR, JPY, GBP, AUD, and others. PBOC adjusts to maintain stability.
- Intervention: PBOC buys/sells CNY or USD reserves to guide the rate. This prevents sharp moves.
The goal: Economic stability. Avoid excessive appreciation (hurts exports) or depreciation (capital flight/inflation).
Why PBOC Decisions Are Crucial for Forex Traders
PBOC policy drives CNY direction. This ripples globally—China is the world’s second-largest economy.
- Rate Decisions & Reserve Requirements: Cuts stimulate growth—weakens CNY (bearish). Hikes cool inflation—strengthens CNY (bullish).
- Sentiment Impact: Dovish PBOC (easing) signals risk-on—boosts commodity currencies (AUD, NZD). Hawkish = risk-off caution.
- USD/CNY as Barometer: Fixing surprises move the pair. Weak fixing (devaluation) pressures CNY lower.
- Commodity Links: China demand affects oil, metals—AUD/CAD correlate.
Volume price analysis (VPA) confirms reactions—high volume on CNY moves shows conviction. Quantum currency strength indicator ranks CNY live for relational trades.
Trading Implications
PBOC announcements create volatility. Prepare with calendar. Wait for volume confirmation post-news. Quantum tools on MT5 or NinjaTrader spot CNY extremes fast.
PBOC’s managed peg keeps CNY stable but responsive. Decisions reveal China’s growth outlook. Traders use this for relational edges in majors and crosses.
Watch PBOC closely. Quantum indicators with VPA turn policy shifts into disciplined opportunities.
By Anna Coulling
Creator of Volume Price Analysis