By Deborah Levine and Laura Mandaro , MarketWatch NEW YORK (MarketWatch) -- The U.S. dollar tumbled against the Chinese yuan after Beijing's weekend decision to loosen its de facto peg against the greenback, a move that fostered fresh appetite for the Australian dollar and other currencies seen as most sensitive to global economic growth. As traders assessed the implications of China's currency shift on global growth expectations, the dollar fell slightly versus the euro and British pound but gained solidly versus the Japanese yen. The U.S. dollar was buying 6.7909 yuan in New York trading Monday, about 0.4% lower than its Friday level of 6.8275 yuan. The dollar index (DXY 85.60, -0.10, -0.11%) , which measures the greenback against a basket of six major currencies, slipped to 85.526, from 85.704 in late North American trading Friday. The euro (CUR_EURUSD 1.2380, -0.0057, -0.4584%) bought $1.2395, up slightly from $1.2365 on Friday, giving up more solid gains in European and Asian trading hours. Last week, the shared currency rose against the dollar by the most since September as traders reassessed the need for the relative safe-haven status of U.S. unit. See Friday's Currencies report. Against the Japanese yen, the dollar (CUR_USDYEN 91.2300, +0.8700, +0.9628%) rose to ¥91.33, from ¥90.76 late Friday. Stock markets around the globe, as well as crude oil and industrial metals, gained broadly in the hopes that a more flexible yuan will boost the spending power of China's consumers -- a huge potential for growth as prospects for a rebound in the U.S. look questionable while Europe and Japan's economies seem likely to limp along. Read about gold, metals. "The reaction provides further evidence that investors do not feel they need G3 to drive global growth. All they need is that the G3 do not derail it," said analysts at Citi. On Saturday, China's central bank announced plans to "enhance ... flexibility" in the yuan's exchange rate, though it also ruled out a one-time revaluation and said any strengthening of its currency would be gradual. Read about China's yuan move. In a statement Sunday, the People's Bank of China said the yuan's 0.5% trading band against the U.S. dollar will stay in place. The statements sparked a global rally Monday in stocks, commodities and currencies often lumped together as "risk assets" -- meaning they're expected to rise faster if economic growth picks up. The decision "paves the way for an end to the de facto USD-peg and a move lower in USD/CNY in the weeks and months ahead," wrote analysts at RBC Capital Markets in a note. They forecast the U.S. dollar could fall to 6.50 yuan by the end of the year. Read more forecasts on yuan. The move should also support China's contribution to global growth, a "positive for risk appetite," they wrote. Commodity currencies gain Meanwhile, the Australian dollar (CUR_AUDUSD 0.8814, +0.0001, +0.0114%) rallied 1.6% to buy 88.35 U.S. cents. The U.S. dollar also fell 1% against its New Zealand counterpart, buying 1.4008 New Zealand dollars (CUR_NZDUSD 0.7121, +0.0003, +0.0421%) . The greenback fell 0.7% against the Canadian dollar (CUR_USDCAD 1.0157, -0.0035, -0.3434%) . Analysts said the move by Beijing, which seemed targeted at soothing U.S. policy makers ahead of the Group of 20 meeting of leading industrialized countries next weekend, should help global growth by increasing Chinese purchasing power and demand for imports, as well as boosting U.S. exports to China. And it should ease fears that Chinese authorities will raise exchange rates too dramatically to cool inflation, thereby avoiding a feared shock to global growth. "By allowing a gradual appreciation of the yuan, China will be sharing more of its growth with the rest of the world," wrote Sherry Cooper, global economic strategist at BMO Financial Group, in emailed comments. "The bottom line is that this is good for the Canadian and U.S. economies, the Canadian dollar, commodity prices and the Canadian and U.S. stock markets," she said.

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