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The Australian dollar rose to its highest level this year on Tuesday as the central bank insisted on curbing inflation, while the yuan jumped to a 16-month high after China took fresh stimulus steps..
The Reserve Bank of Australia held interest rates steady as widely expected, but traders hoping for any hints on when rates might be cut were disappointed as the central bank stressed it “remains committed to returning inflation to target” and indicated that rate hikes remained an option..
“The RBA’s decision today amounts to a reiteration of the hawkish tone, which is consistent with our view that it is still too early to shift to easing,” said Tony Sycamore, analyst at IG.».
He added, “However, the shift may happen very quickly… and we believe that the possibility of cutting interest rates in December is currently unlikely.”».
The Australian dollar, which is sensitive to expectations about the Chinese economy, also received some additional support from stimulus measures announced by the People’s Bank of China (the central bank)..
The Australian pound rose 0.46 percent to $0.68695, its highest since Dec. 28, before paring gains to $0.68435 in intraday trade after Reserve Bank of Australia Governor Michelle Bullock said interest rate hikes were not explicitly discussed at the meeting..
The yuan has been boosted by new stimulus measures from China, including a 50 basis point cut in banks’ reserve requirements, hints at possible further cuts in lending rates and measures to support the property market..
Although the yuan initially fell in offshore trade after the measures were announced, it later rose 0.38 percent to 7.0310 against the dollar as focus shifted to prospects for stronger growth..
The yen fell 0.36 percent to 144.12 against the dollar after Bank of Japan Governor Kazuo Ueda said the bank “can spend time” monitoring developments in overseas markets and economies before tightening monetary policy further..
The euro was little changed at $1.1117..
Sterling hit a two-and-a-half-year high as the Bank of England last week took a less dovish stance than the Federal Reserve or the European Central Bank. It rose 0.09 percent to $1.3360. It earlier hit $1.3366 for the first time since March 2022..
