Currencies Sway as Global Central Banks Poised for Action

The euro remained stable, waiting for U.S. inflation data, while Australian and New Zealand dollars strengthened after China's monetary policy shift. The U.S. Federal Reserve is expected to cut interest rates, focusing on the labor market. Central banks hold meetings this week to discuss potential rate adjustments.

The euro maintained stability against the dollar in uncertain trading on Monday as investors anticipated U.S. inflation data due later in the week. Meanwhile, both the Australian and New Zealand dollars experienced gains after China pledged an 'appropriately loose' monetary policy for the upcoming year.

Markets have almost fully priced in a quarter-point interest rate cut by the U.S. Federal Reserve next week. However, investors remain focused on U.S. consumer price data set to be released on Wednesday. This sentiment was echoed by Michael Brown, a senior research strategist at Pepperstone, who noted that the Fed's current emphasis is on the labor market over inflation concerns.

China's policy announcement buoyed the Australian dollar by 1.15% and the New Zealand kiwi by 0.79%, while geopolitical events added to the complex economic backdrop. Investors' eyes remain on central bank meetings across Europe and North America, where discussions on rate cuts could impact currency dynamics globally.

(With inputs from agencies.)