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The People’s Bank of China (PBOC) said it will step up financial support for technology innovation and consumption stimulation as part of a continued effort to boost economic growth, per Bloomberg.  China’s central bank further stated that it will use new tools to provide liquidity to the stock market and reaffirmed its commitment to lower interest rates and the reserve requirement ratio for banks “at an appropriate time” to promote growth.  Market reaction At the press time, the AUD/USD pair was up 0.02% on the day to trade at 0.6220.  Australian Dollar FAQs One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD. The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive. China is Australia’s largest trading partner so the health of the Chinese economy is a…

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Filed under: News - @ January 6, 2025 12:08 am