The Australian dollar is higher after China cut its key interest rates and the European Central Bank flagged more economic stimulus.
At 0700 AEDT on Monday, the local unit was trading at 86.70 US cents, up from 86.31 cents on Friday.
The People’s Bank of China (PBOC) on Friday said it was cutting its one year rate for deposits by 0.25 of a percentage point to 2.75 per cent and its one year lending rate by 0.40 of a percentage point to 5.6 per cent, both effective on Saturday.
ECB president Mario Draghi on Friday told a conference he was ready to increase its bond purchases “without any undue delay”.
Westpac senior market strategist in Wellington, Imre Speizer, said both events boosted market confidence at the end of last week.
“The Australian dollar rose from a London morning low of 86.06 US cents to 87.23, most of that was PBOC related,” he said.
“Friday’s PBOC announcement should lend some support to the Australian dollar today; 86.50 US cents is now its support level, and there will be a push towards 87.25 US cents.”
AAP
