The dollar, global stocks, oil and core bond yields - all rose Tuesday after China’s central bank cut interest rates in a bid to bolster economic growth after a plunge in the country’s stock market.
On Tuesday the People’s Bank of China cut interest rates by 25 basis points to 4.6%. The one-year deposit rate will fall by 25 basis points to 1.75 percent.
Kallum Pickering, senior economist at Berenberg, said Tuesday's response
sent a clear signal that Beijing, which has intervened several times
this year to keep China's high-powered growth story on track, was still
prepared to respond to market concerns, Reuters has reported.
Worries over a global economic slowdown, led by the shrinking economy in China, have intensified recently, accelerating a selloff across global markets.
Asian and European stocks rebounded earlier Tuesday, but shares in China and Japan continued to slump, with the Shanghai Index 7.63% lower and Nikkei down 3.96%.
On Tuesday the dollar rallied around 1% against the euro and the yen, with EUR/USD at 1.1485 backing further away from Monday's eight-month peaks of 1.1713. USD/JPY jumped to 119.93.
Sterling erased gains against the dollar, with GBP/USD last seen at 1.5779 after rising to seven-week peak of 1.5819 earlier. USD/CHF was up 1.33% to 0.9426.
The Australian and New Zealand dollars extended gains, with AUD/USD up 0.98% at 0.7225 and with NZD/USD climbing 0.89% to 0.6537.
The two Southeast Asian currencies are sensitive to news out of China, which is a top export market for Australia and New Zealand.
Meanwhile, USD/CAD was down 0.69% to 1.3195, stepping off the 11-year high of 1.3298 hit overnight.
Elsewhere, the pan-European FTSEurofirst 300 index rose 4.2 percent, also backed by takeover news to recoup the bulk of the 5 percent-plus it lost the previous day, when around 450 billion euros ($520 billion) was wiped off the value of leading stocks.
German Bund yields climbed as the previous day's rush for safety reversed, with the 10-year benchmark up 11 basis points at 0.69 percent. Yields on shelter U.S. Treasuries also rose.
