(Bloomberg) -- The Australian, New Zealand dollars and Norwegian krone advanced ahead of peers in the Group of 10 as Chinese stimulus plans boosted global risk sentiment, while haven currencies dipped.
The yen was the only currency that weakened against the greenback on Monday.
- The Bloomberg Dollar Spot Index dropped 0.1% after China’s top leaders announced plans for monetary and fiscal stimulus to help the economy
- “It’s all been very incremental and very domestically focused, so I think it has helped China at the margin, but hasn’t really filtered down into the broader global economy,” said Brad Bechtel, global head of FX at Jefferies
- With “commodities across the board catching a bid” on the news, Bechtel says he is “not quite sure that they have done enough just yet”
- “I’m in the camp of ‘I’ll believe it when I see it’,” said Helen Given, a foreign-exchange trader at Monex, pointing to previous stimulus measures that ended up being “more moderate than originally anticipated”
- “It’s all been very incremental and very domestically focused, so I think it has helped China at the margin, but hasn’t really filtered down into the broader global economy,” said Brad Bechtel, global head of FX at Jefferies
- The greenback gained earlier on Monday amid geopolitical uncertainty following the collapse of the Assad regime in Syria and continued turmoil in South Korea
- AUD/USD rose 1.2% to 0.6470, the biggest jump since Nov. 7
- NZD/USD advanced 0.9% to 0.5886
- USD/CAD fell 0.3% to 1.4119; the Bank of Canada is set to decide on rates Dec. 11
- “We see a close call between a 25bp cut and another 50bp cut in December, we view a 25bp cut as more likely given that core inflation is still above the target,” Bank of America analysts, including Carlos Capistran, said in a note. “Any CAD relief rally is unlikely to go beyond 1.40”
- USD/JPY rose 0.7% to 151.02, erasing earlier loss of 0.2%
- “USD/JPY volatility in the short-tenor remains elevated, owing to many media reports related to the Bank of Japan’s potential December hike,” wrote Yusuke Miyairi, a currency strategist at Nomura
- “The core message from the BOJ in its recent communications, in our view, should be that even if it skips a rate hike in December, it does not mean that it’s facing a big barrier to hike to 0.50% in the near-term,” he added
- “USD/JPY volatility in the short-tenor remains elevated, owing to many media reports related to the Bank of Japan’s potential December hike,” wrote Yusuke Miyairi, a currency strategist at Nomura
- EUR/USD rose 0.2% to 1.0587
- Traders are bracing for a raft of central bank meetings this week with policy decisions in Australia, Canada, Switzerland and the euro area
- “Downside risks for the US dollar from the Fed cutting rates this month will be offset by further easing from other G-10 central banks,” said Lee Hardman, senior currency analyst at MUFG. “The BOC, ECB and SNB are all expected to deliver further easing”
