Commodity currencies advance after yuan fix

Australian dollar outperforms 15 of 16 major peers after slumping last week to lowest level in 7 years

Currencies from commodity exporters rebounded and the yen dropped from close to a four-month high after China’s central bank helped calm investors’ nerves by strengthening the yuan fixing by the most in almost a month.

The Australian dollar outperformed 15 of 16 major peers after slumping last week to the lowest level in almost seven years while. China, which is due to publish a slew of economic data this week, will report today that fourth-quarter gross domestic product grew an annual of 6.9 per cent, according to economist estimates. The country is a major export destination for Australia. Canada’s dollar climbed for the first time this year.

“We are seeing stability in sentiment which has been the primary driver of the foreignexchange market,” said Peter Rosenstreich, head of market strategy at Swissquote Bank SA in Gland, Switzerland. “That has given well-oversold commodity currencies room to recover. However, we don’t expect this bullish momentum to be extensive.”

The Aussie dollar rose 0.3 per cent to 68.62 US cents as of 10.31am London time and strengthened 0.5 per cent to 63.18 euro cents. It tumbled to 68.64 US cents in the last trading session, the weakest level since March 2009.

The greenback gained 0.2 per cent to $1.0891 per euro. The yen, seen by some investors as a haven, weakened 0.3 per cent to 117.34 per dollar, having appreciated to 116.51 on January 15, the strongest level since August 24. Financial markets in the US are closed yesterday for a public holiday.

The People’s Bank of China raised its daily reference rate for the yuan by 0.07 per cent yesterday, the most since December 21.