Today's insight: AUD, NZD and CAD knocked by weak Yuan | NZD on standby for 50BP rate cut

AUD, NZD and CAD knocked by weak Yuan after China’s return from holiday

The Chinese financial markets reopened today after a week-long break and the yuan fell to its lowest level in nearly three weeks. That weakness can largely be attributed to a stronger US dollar but it has repercussions elsewhere. As China is such a huge importer of raw materials, a weaker renminbi is having an impact on the value of the countries that supply China. Those include Australia, New Zealand and Canada. Hence, against the pound, for example, in the interbank market, we've seen the Australian dollar drop back to AUD 1.9470, the NZ dollar weaken to NZD 2.1400 and the Canadian dollar weaken to CAD 1.7860. I suspect the Australian dollar may have weakened further were it not for the minutes from the last Reserve Bank of Australia meeting which were entirely inconclusive. The day ahead is light on data, so central bankers’ comments are the most exciting news around. Oh lucky us.?

NZD on standby for 50BP rate cut

There is every chance the Reserve Bank of New Zealand will cut their base rates by 50 basis points when they meet in the early hours of tomorrow (UK time).? If so, that will bring their base rate down to 4.75%, its lowest level since April 2023. As mentioned above the New Zealand dollar is weaker ahead of that announcement. The GBP/NZD rate starts this morning at NZD 2.1400. If the RBNZ delivers on the market expectation we probably won't see a lot of extra weakness in the Kiwi dollar but if they cut less than the 50 basis points the markets are anticipating, NZD strength is almost inevitable.?

Today's Major Economic Releases

00:30 AUD RBA Meeting Minutes?

Interbank Exchange Rates