Dollar Weakens and Aussie Gains on China’s Interest Rate Cut
China’s Stimulus Boosts Global Growth Hopes
The U.S. dollar weakened on Tuesday, and the Australian currency gained after China cut interest rates to support its struggling property market. This move has fueled hopes of additional stimulus measures that would enhance global growth.
Yen Strengthens Amid Speculation of Intervention
The yen gained ground but remained below the 150 level. Investors are closely monitoring whether renewed weakness in the Japanese currency will prompt intervention by the Bank of Japan and Ministry of Finance.
China’s Surprise Rate Cut
China slashed the five-year loan prime rate by 25 basis points, a move that exceeded analysts’ expectations and is seen as a significant step to bolster the economy.
Global Growth Prospects Boost Australian Dollar
The Australian dollar, often considered a barometer for global growth, rose by 0.25% to $0.65575. This surge reflects renewed optimism in the global economy.
Inflation Data and the Federal Reserve
Investors are downplaying higher-than-expected U.S. consumer and producer price inflation data for January, attributing it to seasonal adjustments. This stance indicates that the Federal Reserve is likely to proceed with interest rate cuts in the coming months.
Market Reactions and Currency Movements
The dollar was down by 0.33% at 103.96, while the euro rose by 0.36% to $1.08180. In the offshore market, the yuan strengthened to 7.1963 per dollar, the highest since Feb. 7.
Yen’s Fluctuations and Japanese Authorities’ Response
The greenback fell by 0.22% to 149.77 Japanese yen, prompting speculation over potential intervention by the Bank of Japan and the Ministry of Finance.
Sterling’s Gain and Bank of England’s Assessment
Sterling surged after Bank of England Governor Andrew Bailey expressed comfort with investors betting on interest rate cuts. This comes amid signs of Britain’s economy rebounding after a recession in late 2023.
Cryptocurrency Market
In the cryptocurrency market, bitcoin slipped by 0.8% to $51,495.
