The Australian dollar rallied against major currencies today. While domestic economic data was more or less decent, the driving factor for the Aussie were efforts of Chinese policymakers to stimulate the nation’s slowing economy.
The People’s Bank of China announced that it is cutting the reserve requirement ratio by 50 basis points for all banks, with an additional 100 basis point cut for some banks. The move should free up 900 billion yuan ($126.35 billion) in liquidity and is aimed at combating the slowdown of the country’s impressive economic growth. The news bolstered risk appetite, making commodity currencies the strongest on the Forex market today.
As for Australia economic data, the Australian Industry Group/Housing Industry Association Australian Performance of Construction Index was at 44.6 in August. While the index was still below the neutral 50.0 level, indicating a contraction of the sector, it was noticeably above July’s figure of 39.1.
AUD/USD gained from 0.6813 to 0.6845 as of 19:58 GMT today. EUR/AUD dropped from 1.6189 to 1.6107. AUD/JPY rose from 72.85 to 73.19.
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