The Australian and New Zealand dollars maintained their gains on Wednesday. Traders are closely watching China's market reopening, particularly the yuan midpoint rate set by the People's Bank of China (PBOC). The focus key phrase, "Forex market outlook," highlights the importance of these developments.
China is returning from an extended Lunar New Year holiday. Market participants are eager to see whether Chinese authorities allow for a weaker yuan. Earlier this week, the offshore yuan dropped to a record low of 7.3765 per dollar. However, it has since regained some strength.
The Australian dollar (AUD) remained steady at $0.6251, having gained 0.47% on Tuesday. Similarly, the New Zealand dollar (NZD) was last seen at $0.5648, rising by 0.44%. Both currencies often serve as proxies for the yuan, making them sensitive to China's economic policies.
The forex market has seen reduced volatility after a turbulent start to the week. The U.S. dollar faced pressure in early Asian trading, giving space for the euro to bounce back above $1.02. Meanwhile, the Canadian dollar continued its recovery from Monday’s 22-year low, reaching C$1.4333.
Elsewhere, the Mexican peso held steady at 20.4910 per dollar. The British pound (GBP) was little changed at $1.2479. The Japanese yen edged higher, last trading at 154.30 per dollar.
According to Carol Kong, a currency strategist at Commonwealth Bank of Australia (CBA), China may tolerate a weaker yuan in response to U.S. tariffs. However, it remains uncertain whether the PBOC will take immediate action. Despite ongoing trade tensions, risk sentiment in the markets has been relatively positive.
Traders are advised to stay informed about currency fluctuations and potential policy shifts. Understanding market trends can help in making better trading decisions.
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Forex market outlook: The Aussie and Kiwi hold gains as China reopens. Traders watch the yuan rate for market direction.
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