Dollar slips as China rolls out stimulus
Updates prices to 0550 GMT
By Tom Westbrook
SINGAPORE, Sept 30 (Reuters) -A surging yen steadied on Monday as Japan's incoming prime minister signalled monetary policy should remain accommodative, while commodity currencies were lifted to the year's highs by investor hopes of a turnaround in China's economy.
Japan's yen had leapt on Friday when Shigeru Ishiba, a former defence minister and erstwhile critic of aggressively easy policy won the leadership of the ruling Liberal Democratic Party, which controls parliament and will vote him into office.
It edged out to a one-week high of 141.75 in the Asia session but further moves were capped as Ishiba told public broadcaster NHK that from the government's standpoint, policy must remain accommodative as a trend, given economic conditions.
Analysts said that was enough to pause the sharp rise in the yen following his victory and that the likelihood of a snap election in the coming months - something Ishiba hinted at on Sunday - could weigh on the yen at least over the short term.
"An election basically takes the Bank of Japan out of the equation until December...a marginal yen negative," said Ray Attrill, National Australia Bank's head of foreign exchange strategy.
Elsewhere the euro EUR=EBS was stable at $1.1167 and sterling GBP=D3 traded at $1.3391 with markets looking to U.S. jobs data on Friday as the next major data point that could guide the pace of U.S. interest rate cuts.
European inflation data on Tuesday is also keenly awaited.
The Australian and New Zealand dollars hit 2024 highs as rate cuts and expectations of fiscal support in China raised hopes of an improvement in the slowing economy and drove gains in Chinese markets and everything exposed to China's growth.
The Australian dollar AUD=D3 was up 0.5% at a 20-month high of $0.6941 and the New Zealand dollar NZD=D3 was up 0.5% to a 14-and-a-half-month high of $0.6375.
Last week the U.S. Federal Reserve's favoured inflation measure showed inflation running at a pretty benign 2.2% for the 12 months to August, sending U.S. yields and the dollar lower.
"The trend over next year or so is for the dollar to go down," said Commonwealth Bank of Australia strategist Joe Capurso.
"Inflation is under control. Interest rates are going down and that's good for the global economic outlook, good for risk taking and good for commodity currencies like the Aussie."
Beijing's raft of stimulus measures drove a rally in China's yuan CNY=CFXS last week, even as interest rates were lowered, as investors piled into Chinese stocks that notched their best week in a decade. The yuan broke the psychological 7-per-dollar mark in offshore trade on Friday though it hovered at 7.0129 in onshore trade on Monday.
World FX rates https://tmsnrt.rs/2RBWI5E
Reporting by Tom Westbrook;
Editing by Shri Navaratnam and Sam Holmes
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
