The People’s Bank of China announced earlier that they were slashing banks’ reserve requirements in an effort to encourage bank lending while at the same time attempting to reverse the country’s slow growth trend. With the news, both the New Zealand and Australian Dollars edged higher; China is a major export destination and key trading partner of both Pacific Rim nations and the slowing demand in China has precipitated the steady near 2-year decline of the Aussie Dollar, especially. Currency strategists believe that the markets’ reaction was of the usual knee-jerk variety and that the gains are likely temporary as previous stimulus attempts by the PBOC have not had much success.
As reported at 8:50 am (GMT) in London, the AUD/USD was trading at $0.7810, a gain of 0.3% and falling away from the session peak of $0.7844, a fresh 1-month high; earlier this month the AUD/USD had struck a 6-year trough at $0.7534, a factor of the decline in iron ore prices. The NZD/USD edged about 0.6% higher to trade at $0.7707.
Greece Weighs on Euro Still
In the U.S. over the weekend, the G20 and IMF governors’ meetings concluded in Washington, DC; the release of that meeting’s communiqué showed news that there had been no further progress on solving the crisis in Greece which kept the Euro under pressure. In European trade, the EUR/USD was down about 0.2% to trade at $1.0785, while the EUR/JPY was trading at 127.895 Yen, a loss of 0.5%.