Australian and New Zealand dollars rise to new highs on China boost By Reuters

By Rae Wee

SINGAPORE (Reuters) – The Australian and New Zealand dollars hit multi-month highs on Wednesday, while sterling hit a two-year high against a weaker dollar as China’s aggressive stimulus package provided the latest solution for risk appetite.

The stock hit an early-session high of $0.6907 in Asia, its highest since February 2023, while rising to a nine-month high of $0.6353, extending its strong gains from the previous session.

Global markets were basking in the glow of China’s latest support measure announced on Tuesday, from big interest rate cuts to help for its stock market, in a move that cheered investors.

Strong risk sentiment, in turn, kept the dollar on the back foot.

Sterling similarly advanced 0.1% to trade at $1.3429, a level not seen since March 2022. It drew further support from less aggressive expectations of a rate cut by the Bank of England in this year compared to the Federal Reserve.

“Judging by the financial market reaction, those announcements were actually bigger than market expectations,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia (OTC: ), noting that currencies with strong ties to the economy particularly benefited Chinese, like the Australian one. and New Zealand dollars.

“The Kiwi dollar has actually been the best performer among its G10 peers and I think that’s because market participants believe that the measures announced yesterday are supporting consumer demand and therefore usually a good sign for export demand dairy from New Zealand,” she said.

The dollar – a traditional safe haven currency – meanwhile came under pressure, with growing bets on another US interest rate cut in November adding headwinds to the greenback.

Markets are now pricing in a 58% chance of a 50 basis point rate cut at the Fed’s next policy meeting, up from just 29% a week ago, according to CME’s FedWatch tool.

Data on Tuesday showed that US consumer confidence unexpectedly fell in September amid growing concerns about the health of the labor market.

“Consumers remain bearish on the economy,” Wells Fargo economists said in a note.

“While we expect there are a number of reasons why households are becoming more pessimistic, labor market moderation remains at the fore.”

Against a basket of currencies, the greenback was last at 100.28, hovering near a more than one-year low of 100.21.

In the previous session, it fell more than 0.5%, its biggest one-day percentage decline in a month.

Elsewhere, the yen held steady at 143.19 per dollar, while the euro gained 0.08 percent to $1.1188, nearing a 13-month high last month.