Pressure on the Chinese yuan eased after the People’s Bank of China cut the interest rate on its medium-term funding for financial institutions to a record low. The yuan fell to 7.0560 per dollar in the onshore market.
The analysts expect that China’s central bank will lower the country’s benchmark loan prime rate to bring down financing costs for companies hit by coronavirus on April 20. Furthermore, China plans to release information on its gross domestic product for the first quarter on Friday.
Meanwhile, the Australian dollar dropped by 0.9% to $0.6384, pulling back from a five-week high. The Aussie declined after new data showed that Australian consumer sentiment collapsed to a 30-year low in April. The New Zealand dollar also fell by 0.9% to $0.6052.
What about the U.S. dollar?
The dollar declined by 0.16% to 107.05 yen on Wednesday, close to its lowest level in a month. It has also briefly lowered to $1.0994 per euro, the weakest in two weeks. On the other hand, the dollar managed to recover two days of losses against the sterling, advancing to $1.2588.
Investors cautiously moved onto riskier currencies on Wednesday, causing the dollar’s fall. The greenback has been under pressure since the Federal Reserve executed heavy measures to boost dollar supply.
Michael McCarthy, the chief market strategist at CMC Markets in Sydney, noted that there’d been a flood of money from the Fed, which is the backdrop behind market moves. According to him, Trump has made it clear that he wants to lift restrictions, and this is what the market wants to hear. However, the U.S. is nowhere near the all-clear when it comes to this virus.
Trump stated on Tuesday that he is close to completing a plan to end the coronavirus shutdown. He plans to speak with governors of all 50 states to authorize them to open their economies on time.
The dollar traded near a two-week low of 0.9597 against the safe-haven Swiss franc, which is another sign of improving risk sentiment. However, many analysts remain cautious so far.