The Aussie peaked at $0.6907, its strongest since February 2023, while the kiwi rose to a nine-month high of $0.6353, with both currencies extending their rallies from the earlier session
The Australian and New Zealand dollars hit multi-month highs on Wednesday while the yuan reached its strongest level in more than a year, as China’s aggressive stimulus package provided the latest shot in the arm for risk appetite.
The Aussie peaked at $0.6907 in the early Asian session, its strongest since February 2023, while the kiwi rose to a nine-month high of $0.6353, with both currencies extending their rallies from the earlier session.
The Australian dollar later pared some of its gains after data on Wednesday showed domestic consumer prices slowed to a three-year low in August, while core inflation reached its lowest since early 2022. It was down 0.06% at $0.6888.
Markets globally hit record highs after China’s latest slew of support measures announced on Tuesday ranging from outsized rate cuts to aid for its stock market, in a move that encouraged investors.
In line with its broad easing measures, the People’s Bank of China on Wednesday also reduced the cost of its medium-term loans to banks to 2.00% from 2.30%.
The onshore yuan advanced to a 16-month high of 7.0012 per dollar and likewise for its offshore unit, which peaked at 6.9952 per dollar.
Judging by the financial market reaction, those announcements were actually bigger than market expectations, according to Carol Kong, a currency strategist at Commonwealth Bank of Australia, noting they particularly benefited currencies with strong links to the Chinese economy such as the Australian and New Zealand dollars.
The kiwi dollar was actually the outperformer amongst its G10 peers, and I think it’s because market participants think that the measures announced yesterday are supportive of consumer demand and therefore it’s usually a good sign for demand for New Zealand’s dairy exports, she added.