LONDON – The yuan and the Australian dollar rose to three-month highs today, boosted by strategic measures by China’s central bank and a weakening of the US dollar, which hit a two-month low as it fell to 103.64. This comes as market consensus grows around the belief that US interest rates may have peaked following recent weak economic indicators.
The Federal Reserve’s potential monetary policy shift is under scrutiny, with futures pointing to a 30% chance of rate cuts starting in March 2023, according to the CME FedWatch tool.
Amid these developments, the euro and the pound sterling also made gains against the US dollar, reaching $1.0924 and $1.2475 respectively. The yen experienced a rebound, trading below 150 per dollar, while the New Zealand dollar reached $0.60235.
Investors are gearing up for more information this week with the release of Fed meeting minutes and preliminary Eurozone PMI data, which are expected to shed light on future market dynamics.
Meanwhile, China’s decision to keep its benchmark lending rates stable despite challenges to its economic recovery has weighed on currency valuations, contributing to regional monetary adjustments and supporting the yuan’s strong position.
The market is watching for greater economic clarity from upcoming data releases and communications from central banks, which could confirm or adjust current expectations regarding global monetary policies.
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