Euro Rises Against Dollar Amid China's Stimulus-Fueled Risk Appetite

The euro gained against the dollar following China's aggressive stimulus measures, which boosted risk appetite. Despite weak German economic data, the euro showed resilience, influenced by China's improving economic outlook. The Australian and New Zealand dollars saw mixed reactions, while the U.S. dollar faced pressure from expectations of further rate cuts. The yuan hit a 16-month high.

The euro gained slightly against the U.S. dollar on Wednesday, while the yuan reached its strongest level in over a year, buoyed by China's aggressive stimulus measures. The U.S. dollar, known for its safe-haven status, came under pressure as China's economic moves prompted expectations of additional rate cuts in the U.S.

Despite weak economic data from Germany and concerns about the French budget, the euro has held its ground well against the dollar. Jane Foley, senior forex strategist at Rabobank, attributed this resilience to expectations of stronger Chinese demand benefiting Europe's economy.

The euro edged up 0.06% to $1.1187, nearing a 13-month peak. The Australian and New Zealand dollars retreated after earlier gains. Carol Kong, a currency strategist at Commonwealth Bank of Australia, noted that China's stimulus particularly benefited currencies tied to its economy. The People's Bank of China cut the cost of medium-term loans, bolstering the yuan. Markets globally reacted positively to China's measures, while U.S. consumer confidence dipped, adding pressure to the dollar.

(With inputs from agencies.)