Aussie, kiwi dollars struggle on China's rate cuts; dollar adrift
China on Monday surprised markets by cutting major short and long-term interest rates in its first such broad move since last August, signalling intent to boost growth in the world's second-largest economy.
The two Antipodean currencies, often used as liquid proxies for the Chinese yuan, were flat after slumping in the previous session in the wake of the news. The Australian dollar was trading at $0.6643 early on Tuesday and the New Zealand dollar dipped 0.01% to $0.5979.
«For the Aussie and the kiwi, they tend to be reflecting a more liquid and free expression in terms of the realities currently facing the Chinese economy,» said Rodrigo Catril, senior FX strategist at National Australia Bank (NAB).
«The easing coming from the PBOC yesterday is not huge in terms of magnitude, but it does signal that willingness for the PBOC to support the economy alongside the fiscal side, and that probably plays to the view that there will be some tolerance for a little bit of weakness in CNY.»
The offshore yuan last stood at 7.2973 per dollar.
In the broader market, currency moves were subdued as traders looked to central bank meetings in the U.S. and Japan next week.
The euro eased 0.02% to $1.0889, while sterling similarly fell 0.02% to $1.2928.
Against the yen, the dollar edged 0.14% lower to 156.79. The dollar index was flat at 104.29.
The market reaction to U.S. President Joe Biden's decision to bow out of the election race over the weekend was muted, though there was some unwinding of the so-called Trump trade,
