In the wake of the surprise move from the People’s Bank of China (PBOC), higher-risk currencies such as the Euro received an unexpected boost. Analysts say that investors could see the PBOC move as the trigger for a currency war which could benefit Gold in the short term. As a commodity, Gold tends to gain favor during periods of global uncertainty thus, commodity-linked currencies could also briefly benefit. However, at the present time, sentiment for the Aussie and Kiwi Dollars is still negative, given the recent dismal news on the Chinese economy which spurred the PBOC to action.
As reported at 11:37 am (BDT) in London, the EUR/USD was trading higher at $1.1031, a gain of 0.12%, still more than two dozen pips away from the session high of $1.1055, which was an 11-day peak. The EUR/GBP was also higher at 0.7078 Pence, a gain of 0.1700%. Meanwhile, China’s economy sent Antipodean currencies lower; the AUD/USD was trading at 0.7325, down 1.17% while the NZD/USD was lower at $0.6552, a loss of 0.87%.
More Chinese Data in the Pipeline
China has two key economic reports that will be released early tomorrow; retail sales and industrial production. The Chinese government has been trying to move away from being “the world’s exporters” toward a more consumer-oriented economy. The outcome of tomorrow’s reports will be very telling and a disappointment could lead to greater uncertainty for the Chinese economy.