The Australian dollar is getting some help today, thanks to stimulus out of China. With China as a major trading partner to Australia, it’s no wonder that the Aussie gets a boost when economic stimulus is on the table.
Over the weekend, the People’s Bank of China announced that it is cutting the amount of cash banks need in reserves. The idea is to encourage banks to lend in order to increase economic growth. Growth has been slowing in China, and that has some policymakers worried.
The prospect of economic growth in China is helping the Australian dollar because China imports many of its goods from the Down Under nation. The ability to buy more Australian goods is providing hope for the Aussie economy, and for the dollar.
Even with this development, though, the Australian dollar faces some challenges. There is low inflation in Australia, and trade is still weak. Many are waiting to see whether or not the Reserve Bank of Australia will ease its policy a little bit soon, in the name of stimulus.
At 11:02 GMT AUD/USD is higher, moving up to 0.7789 from the open at 0.7828. AUD/NZD is lower, dropping to 1.0122 from the open at 1.0158. EUR/AUD is lower, dropping to 1.3794 from the open at 1.3822.
If you have any questions, comments or opinions regarding the Australian Dollar,
feel free to post them using the commentary form below.