Aussie gains for fourth day on China tariff news; yuan up

• The U.S. dollar gained 0.1pc to $1.2985 per pound. It was trading just below a two-month high against the euro at $1.0996.
• The Chinese yuan was trading at 6.9702 yuan per dollar, after weakening to 7 per dollar on Monday.
• Chinese authorities have also pumped in billion of dollars into money markets this week in an effort to restore calm and have pledged to do more to support the economy.

LONDON: The Australian dollar rose for a fourth straight day on Thursday and the Chinese yuan gained after Beijing unexpectedly said it would reduce tariffs on some U.S. imports, fueling demand for riskier assets.

China said on Thursday it would halve tariffs on some U.S. imports, bolstering hopes the global economy will avoid a major shock from a coronavirus outbreak. It also said it hoped to work with the United States to eliminate all tariff increases in future.

That seemed to dispel pessimism about the economic impact of the coronavirus outbreak. Still, the number of deaths from the disease rose by 75 on Thursday, almost all of them in China, and media reports this week of a treatment proved to be premature.

"Though yesterday's coronavirus vaccine stories were premature, markets have extended the risk-on tone overnight, this time on news that China will halve tariffs," Elsa Lignos, global head of FX strategy at RBC Capital Markets said.

Moreover, though infections stood at more than 28,000, RBC's Lignos noted Thursday was the first day in over a week that new case numbers appear to be stabilising in China.

Chinese authorities have also pumped in billion of dollars into money markets this week in an effort to restore calm and have pledged to do more to support the economy.

Against the dollar, the Aussie advanced 0.1pc to $0.6765.

The Chinese yuan was trading at 6.9702 yuan per dollar, after weakening to 7 per dollar on Monday.

The U.S. dollar gained 0.1pc to $1.2985 per pound. It was trading just below a two-month high against the euro at $1.0996.

Broader market volatility fell to new lows, with one-month implied euro-dollar price swings dropping to a record low of 3.7pc this week.