The Aussie rebounded in Asia on Monday following a surprise rate cut
by China on Friday with the impact expected to spread around markets with other major central banks meeting this week.
AUD/USD traded up 0.37% to 0.7252, with the currency's fortunes closely tied to the Chinese economy.
The Aussie received a boost after China’s central bank unexpectedly cut interest rates on Friday. The bank cut its one-year deposit rate by 25 basis points to 1.5%. The PBOC lowered its one-year lending rate by 25 basis points to 4.35%. It was the sixth rate cut since last November, amid efforts by authorities to shore up slowing growth in the world’s second largest economy.
The dollar lost some of its gains against the yen and the euro in Asia trade Monday, with investors locking in profits that were propelled by brighter risk sentiment and a global stock market recovery, driven by both the China rate cut announcement and hints from ECB president Mario Draghi that more stimulus may come in December.
The U.S. currency was last at 121.14 yen, down 0.28%, after reaching as high as 121.60 earlier in the session, its highest since Aug. 31. That compared with 121.45 late Friday in New York.
The U.S. dollar was weaker against the euro, which rose to 1.1032 dollars midday from 1.1020 late Friday, after falling as low as 1.0989, its lowest since Aug. 11.
Market players are now focusing on Wednesday’s monetary policy announcement
by the Federal Reserve for fresh indications on the timing of an initial
rate hike, as well as the Bank of Japan meeting due on Friday.
