Currency Shake-up: Aussie and Kiwi Dollar Plummet Amid China's Stimulus Doubts

The Australian and New Zealand dollars took a hit as skepticism rose over China's stimulus measures. Cooling inflation in New Zealand bolstered expectations of a rate cut, while the U.S. dollar remained strong due to steady economic data and Federal Reserve policy speculations.

The Australian and New Zealand dollars experienced a significant decline on Wednesday, driven by growing doubts about stimulus actions from their key trading partner, China. Investors expressed skepticism regarding China's financial commitment, leading to a downturn for these currencies.

In New Zealand, cooling inflation figures add to expectations for aggressive rate cuts by the central bank. This trend saw the New Zealand dollar drop to levels last seen in August. The head of FX strategy at National Australia Bank, Ray Attrill, highlighted this building skepticism towards China's fiscal promises.

Meanwhile, the U.S. dollar maintained its strength, buoyed by resilient economic indicators and moderate inflation expectations. Traders anticipate a 25 basis-point cut by the Federal Reserve, with the odds shifting away from a larger rate cut. The upcoming European Central Bank policy decision is also highly anticipated by the markets.

(With inputs from agencies.)