Chinese retail sales, the investment in long-term assets, and industrial production all missed expert expectations today as China’s shaky rebound from the harsh COVID-19 lockdowns stalled.
The aggressive remarks made by Federal Reserve members in reaction to early indications that US inflation could well have topped certainly helped to bolster the dollar. Prior to ceasing rate increases, Thomas Barkin, the President of the Richmond Fed said last week that he would rather see inflation maintain the Federal Reserve’s 2% goal for a while.
Following a rise the week before, the euro is gradually coming down near parity. Given the decline in inflation, it is still too premature for the Federal Reserve to loosen its monetary policy, according to Jens Naervig Pedersen, head analyst for DanskeBank’s FX and rates strategy, while his sentiment on the US Dollar is still bullish.
After the People’s Bank of China (PBC), for the second time in 2022 alone, abruptly reduced borrowing charges on policy loans and liquidity instruments, the domestic yuan weakened to a low of 6.7696 per dollar, down over the past closing of 6.7430.
The dominating negative threats from the COVID outbreak and property-sector slump drove the PBOC to reduce rates to encourage demand, noted the chief Asian FX strategist at Mizuho Bank, Ken Cheung, notwithstanding the warnings of rising inflation and flush liquidity circumstances.
The week before, US data revealed the first drop in import values in seven months, and reports revealed US consumption and production prices likewise dropping, boosting investor prospects for less hawkish tightening of the Federal Reserve.
Consumer sales figures on August 12 may provide some new information on the state of the economy, and analysts will closely examine the results of the Fed’s latest discussion, which are scheduled to be issued on August 17, for additional hints on policymakers’ views.
According to financial markets, the FOMC is currently expected to raise rates by 75 bps in the coming month, with a 56.5% chance that the rate of tightening will slow down.
The difficulty of Europe with the Ukraine conflict, the search for alternative energy supplies, and a blow to the economy of Germany from a lack of precipitation caused the euro to weaken to $1.0232.
