PBoC’s Aggressive Liquidity Moves Amid Global Easing Signals

Over the past week, the PBoC injected RMB 1.1978 trillion into the financial system through a 7-day reverse repo, with the same amount due this week.

Surprisingly, today, the PBoC added another RMB 471 billion through the 7-day reverse repo, resulting in a net injection of RMB 418.9 billion; good so far.

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Additionally, a 1-year MLF operation injected RMB 300 billion, but with RMB 401 billion due, there's a net drain of RMB 101 billion.

Despite this, we're seeing month-over-month increases in MLF injections, showing the PBoC is working to keep the financial system well-watered.

With the DXY taking a dip, it feels like the global financial forecast just predicted rain.

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On the other side, the FED's Reserve Bank Credit saw a minor decrease, signaling they’re not ready to fully unleash the money printer.

The USD continues to decline as investors shift to riskier assets following Fed Chair Jerome Powell's dovish speech.

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Powell hinted that the economic outlook is nearing the Fed's goals, especially on inflation, leading markets to expect one or two cuts in September.

While the DXY remains in a bearish trend, oversold conditions suggest a potential short-term correction.

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Rate cuts and a falling DXY could trigger global easing, turning this financial chess game into a gold grabbing cycle.

When it rains, it pours they say, and you better have more than just a bucket to catch the gold rush.

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Our AE Global Liquidity indicator saw a minor decrease of 0.82%. The RoC chart remains bullish, with the 3-month rate still above the 12-month rate.