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Markets React to Chinese Declining Market and PBOC's Decision to Cut Rates

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The US dollar was higher against the euro and yen for the second consecutive day after having lost momentum on Monday amidst china’s market decline. The dollar was mainly supported by a positive consumer confidence index. Markets were broadly affected by The People’s Bank of China’s (PBOC) decision to cut interest rates late on Tuesday and lower the amount of reserves that the banks must hold in an attempt to save the market from collapsing. The Chinese market had lost almost 20 percent in three days.
The U.S. Conference Board said on Tuesday that its index of consumer confidence was at its seven months high at 101.5 for August after being at 91.0 in July.
The USD/JPY pair was 0.5 percent higher at 119.5 and EUR/USD lost 0.18 percent to 1.1499.
NZD/USD added 0.29 percent trading at 0.6493, the pair was expected to find support at 0.6423 and resistance at 0.6567.
The AUD/NZD pair was also lower losing 0.37 percent and trading at 1.0972. The Kiwi was supported by a positive trade balance.
EUR/NZD lost 0.55 percent to trade at 1.7692.
The U.S. dollar index which measures the greenback against a basket of six other major currencies added 0.18 percent to trade at 94.09 recovering from Monday’s 92.52.
Brent for October delivery on the ICE Futures Exchange in London was 25 cents higher at 43.46 dollars a barrel and U.S. Crude for October delivery on the New York Mercantile Exchange was 26 cents higher at 39.57 dollars a barrel.
Gold futures for December delivery on the Comex of the New York Mercantile Exchange added 0.37 percent to 1,142.50 dollars a troy ounce during U.S. morning trading hours on Wednesday. Overnight gold prices had fallen sharply as the dollar gained strength following a positive U.S. consumer report.
Elsewhere on the Comex silver futures added 0.34 percent to 14.660 dollars a troy ounce and copper futures lost 0.20 percent to 2.259 dollars a pound after having fallen to 2.209 on Tuesday their lowest level in six years.

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