The dollar fallout more broadly is harder to figure – not least with Japanese markets closed for a holiday on Monday and following Thursday’s latest round of yen-buying intervention by the Bank of Japan.
On balance, the dollar index and dollar/yen were stuck fast – with early dollar gains against Mexico’s peso and China’s yuan pared back a bit ahead of the open as full-year Fed easing speculation rose as high as 63 bps.
The euro and sterling held last week’s gains, the latter at its best levels in a year against the dollar and in two years against the euro. Currency market volatility subsided, meantime, and three-month implied vol for the pivotal euro/dollar exchange rate fell to its lowest since late 2021.
China’s markets had a mixed reaction to another surprisingly poor set of economic readings there – second-quarter GDP growth fell to as low as 4.7%, far below the 5% that was both forecast by economists and also targeted by Beijing.
Although there was a slight beat in June industrial numbers, retail sales also missed expectations for the month.
Perhaps most alarming of all is the ongoing house price bust, with new home prices falling for the 11th straight month in May and the 3.9% annual decline being the steepest in nine years. Property investment fell 10.1% in the first half of 2024 from a year earlier, meantime, and home sales by floor area declined 19%.
Hong Kong stocks did lunge 1.5% lower and the yuan weakened slightly on interest rate cut speculation, but mainland China stocks eked out a small gain on hopes of more substantial government support.
China’s ruling Communist Party starts its ‘third plenum’ this week. Reforms top the agenda and, amid a packed priority list, may include the most significant overhaul of the fiscal system in three decades to try to redirect income from Beijing to cash-strapped regional governments.
Back on Wall Street, the earnings season unfolds with Goldman Sachs and BlackRock next up after an underwhelming start from other big banks on Friday.
And Google parent Alphabet is in advanced talks to acquire cybersecurity startup Wiz for roughly $23 billion, in a deal that would represent the technology giant’s biggest acquisition ever.
