yuan boosted by China stimulus cheers, Aussie rises ahead of RBA By Investing.com

Investing.com– Most Asian currencies advanced on Tuesday as China’s yuan backed by Beijing announced more stimulus measures, while the Australian dollar rose on expectations of shock signals from the Reserve Bank.

A weaker US dollar helped regional markets as the greenback remained low after an interest rate cut by the Federal Reserve last week. This week focuses on several cues from the Fed as well as key inflation data.

Sentiment towards regional markets was further bolstered by the Chinese government’s rollout of several stimulus measures aimed at supporting lagging economic growth.

Chinese yuan hits 16-month high on stimulus

The Chinese yuan strengthened on Tuesday, with the pair falling 0.2% to its lowest level since May 2023.

Chinese markets rallied after the government announced a wave of stimulus measures, notably a reduction in reserve requirements for banks along with lower mortgage rates to boost the housing market.

The move raised hopes of a recovery in Asia’s biggest economy that could then spread across the region. But recent economic readings have shown a steady slowdown in activity through most of the third quarter.

Lower rates also herald more yuan weakness, although recent government intervention has kept the currency strong.

The yuan’s offshore pair also fell 0.2 percent to a 16-month low.

Australian dollar rises with RBA on tap

The Australian dollar firmed, with the pair up 0.2% and approaching the 2024 peak.

The RBA is expected to do so at the conclusion of a meeting later in the day.

But recent signs of sticky inflation and a robust labor market are expected to draw a dovish stance from the central bank, with the RBA likely to signal that rates will remain high for longer.

Such a trend makes the RBA an outlier among its global peers, but it also benefits the Aussie.

Broader Asian currencies strengthened. The Japanese yen pair stabilized after a sharp decline in overnight trade. Purchasing managers’ index data showed a sustained decline in Japanese activity, while it continued to grow.

The South Korean won pair fell slightly.

And they steadied in Asian trade after a slow start to the week.

The Singapore dollar pair edged lower, while the Indian rupee pair retreated further from record highs.