China’s unexpected weekend decision to cut the reserve ratio requirement by 50bp boosted risk appetite throughout the Asia session. The effect was magnified by the element of surprise. USDJPY scrambled higher to 79.89 but the rally was cut short when the Japanese trade deficit for January came in smaller than expected. Although China’s stimulus measure in itself is limited in efficacy and comes amid signs of a slowdown, the PBoC’s joining of the ranks of major central banks adding to easing will help to further stabilise economic conditions. Continue reading →