Global Currency Movements Amid Central Bank Policies

The Australian dollar remains strong with potential hints of near-term easing from the central bank. The People's Bank of China's stimulus measures and the Bank of Japan's cautious approach impact the yen and the euro, while Sterling stays close to its peak following a less dovish stance by the Bank of England.

The Australian dollar hovered near its highest level this year on Tuesday, as the central bank prepared to hold policy steady. Traders focused on potential near-term easing. The currency received additional support from the People's Bank of China's stimulus measures, which slightly weakened the yuan in offshore trading.

The yen remained stable in its recent range against the dollar, awaiting a speech by Bank of Japan Governor Kazuo Ueda. Ueda's comments could hint at the pace of interest rate hikes, which the central bank is in no rush to implement further. Meanwhile, the euro attempted to recover after a nearly 0.5% drop caused by weak business activity surveys suggesting additional rate cuts.

Sterling tracked close to a 2-1/2-year peak following the Bank of England's less dovish stance compared to the Federal Reserve and European Central Bank. The Australian dollar edged up to $0.6839 as of 0212 GMT, extending a 0.45% rally from the previous session. The Reserve Bank of Australia is expected to keep rates steady, though economists and traders diverge on potential cuts later this year.

People's Bank of China Governor Pan Gongsheng announced a 50 basis point cut to banks' reserve requirements, indicating further easing in key lending rates. "This is broad-based easing from China," said Tony Sycamore, a markets analyst at IG. "Once the RBA is out of the way, the Aussie could rally up to 70 U.S. cents by year-end," he added.

China's yuan initially weakened by about 0.16% after the announcement but stabilized at 7.0590 per dollar. The Japanese yen edged up to 143.495 per dollar, remaining within its September range. The yen has retraced from its recent high on diminishing bets for aggressive BOJ tightening. The euro stayed relatively unchanged at $1.1105. A survey by S&P Global revealed sharp contraction in euro zone business activity this month.

Sterling remained stable at $1.33445. The Bank of England held rates unchanged last Thursday, with its governor emphasizing caution not to cut rates too quickly or drastically.

(With inputs from agencies.)