7 Dec 2021
Dollar Fall, Chinese Rate Cut Pave the Way for Risk-Sensitive Currencies
The Index Today
The Index Today — The dollar value dropped on Tuesday, spurring traders to favor riskier currencies due to a Chinese rate cut coupled with reports indicating milder symptoms of the Omicron virus.
The Dollar Index fell from 0.1% to 96.215 at 2:50am ET (0750 GMT) while the GBP/USD pair rose from 0.1% to 1.3281. EUR/USD grew from 0.1% to 1.1293, and the USD/JPY pair rose from 0.2% to 113.72, marking its highest leap in two weeks.
The risky AUD/USD pair grew from 0.6% to 0.7091 leading to continuing gains from Monday when it hit its record high in seven weeks. This comes as the Reserve Bank of Australia contended the Omicron variant to be less likely to thwart economic rebound.
The USD/CNY dropped from 0.1% to 6.3688 post the People’s Bank of China’s (PBOC) decision to slash banks’ RRRs by 50 basis points for the second time this year. This move would allow banks to discharge CNY 1.2 trillion ($188 billion) into the economy to help relieve pressure on property companies while also contributing to the country’s economic growth.
Nonetheless, the dollar remains strong, particularly against the euro, as the Federal Reserve plans to secure its monetary policy before Europe does.