The unexpected cut in some benchmark lending rates in China has highlighted the uniqueness of the outlook in the Asian country, although it only weighed on the yuan briefly.
The dollar index, which had fallen sharply last week before rebounding on Friday, was down 0.1% at 95.076.
“Market participants appear to infer that policy pricing risks are now more balanced,” Goldman Sachs said in a note to clients. The Federal Reserve meets on January 25-26 and is not expected to move rates yet.
The euro was up 0.1% at $1.1432.
Last week, Reuters reported that even the Bank of Japan is debating when to start announcing its rate hike plans.
The exception is China, where Monday’s growth data confirmed that coronavirus restrictions are weighing on consumption and policymakers announced a surprise cut in borrowing costs.
The People’s Bank of China (PBOC) said it was cutting the interest rate on $110 billion worth of medium-term loans by 10 basis points, surprising analysts who now believe it is a harbinger of what is to come.
The yuan initially lost ground as government bonds rose after the rate cut, before firming at 6.3475 per dollar.
Inflation data on Wednesday could also help extend sterling’s month-long rally after last week stalled around its 200-day moving average. On Monday it stood at $1.3679.
Source From: Ambito
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