25/09/2024 Evening Reports
The US dollar is teetering on the edge of erasing its 2023 gains as expectations grow that the Federal Reserve will slash interest rates more aggressively to support the economy. Traders are increasingly betting on further rate cuts, with the likelihood of a significant half-point reduction in November. This has weakened the dollar, particularly against the euro and the pound, and sparked concerns about its future strength. While there are no clear signs of a recession, growing economic strains such as rising job losses and falling consumer confidence have intensified the debate over the Fed’s next moves.
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Yen Weakens as China’s Stimulus Boosts Risk Appetite; Yuan Hits 16-Month High
The yen weakened against major currencies on Wednesday as China’s aggressive stimulus measures boosted risk appetite, leading to gains for the euro, sterling, and Australian dollar. China’s broad stimulus package, including outsized rate cuts and support for its stock market, fueled optimism in Asian markets. Investors moved into riskier assets, borrowing in yen due to its low interest rates. The U.S. dollar also steadied near 14-month lows but regained ground against the yen, while the euro showed resilience, benefiting from improved sentiment linked to China’s economic outlook.
China’s measures also strengthened the yuan, which hit a 16-month high against the dollar, with the onshore unit nearing the 7-per-dollar level. The People’s Bank of China lowered the cost of medium-term loans, further supporting the yuan’s rise. The Australian and New Zealand dollars initially peaked but later pulled back as slower inflation data from Australia weighed on the Aussie, while the kiwi retreated after reaching a nine-month high.
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