Asia FX ticks higher, yuan hits 16-mth high on China stimulus cheer
Most Asian currencies rose slightly on Wednesday as persistent bets on interest rate cuts dented the dollar, while the Chinese yuan hit a 16-month high on optimism over more stimulus measures.
The Australian dollar and the New Zealand dollar both clocked strong gains on their exposure to China, while the Japanese yen steadied after a slightly stronger reading on producer inflation.
Regional currencies remained largely upbeat after the Federal Reserve cut interest rates last week and announced the start of an easing cycle that is widely expected to drive more capital flows into Asia.
The dollar index and dollar index futures fell 0.2% each in Asian trade, with focus turning to an upcoming address by Fed Chair Jerome Powell, and PCE price index data due later in the week.
Chinese yuan at 16-mth high on stimulus cheer
The Chinese yuan was the best performer among its peers this week, with the USDCNY pair falling 0.2% to its lowest level since May 2023.
The yuan surged after Beijing announced a slew of stimulus measures on Tuesday, including a cut to banks’ reserve requirements, as well as lower mortgage rates.
The moves pushed up hopes for a Chinese economic recovery, with increased liquidity expected to help offset a deflationary trend in the country.
But analysts said that more measures, especially target fiscal steps, were needed to support the Chinese economy.
Australian dollar steady amid mixed CPI, hawkish RBA
The Australian dollar’s AUDUSD pair steadied just below a 19-month high on Wednesday, after rallying sharply in the prior session on the China boost and a hawkish Reserve Bank.
