China's 10y govt yield drops 5bps to 2.85% amid bets on RRR cut

China may lower the RRR as soon as this month, according to the Securities Daily. 

As a consequence, China's 10-year govt yield dropped 5bps to 2.85% today and USD/CNH is firm in the open on Monday trading between 6.3690 and 6.3752 the high.

The recovery in AUD/USD is stalling as well and the US dollar is higher by some 0.13% on central bank divergence themes. 

AUD/USD H1 chart

The above analysis acknowledges the risks on the downside but also the potential for bulls to move in at the neckline of the hourly W-formation. This could result in a continuation of the correction to test old support near a 61.85 Fibonacci retracement of the last bearish hourly impulse.