Dollar stabilizes after last week's selloff; Chinese yuan hit by weak GDP
Investing.com — The U.S. dollar stabilized in early European hours Monday after suffering its worst weekly drop this year, while weak Chinese growth data pressured the yuan.
At 03:05 ET (07:05 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded marginally lower at 99.597, after dropping 2.2% last week, its sharpest one-week fall since November.
The dollar index last week fell below the 100 level for the first time since April 2022 after softer-than-expected inflation data–consumer prices on Wednesday and producer prices on Thursday–supported the view that the Federal Reserve will end its interest rate-hiking cycle after a final increase next week.
“Dollar long positions are evaporating rapidly, with PPI numbers all but confirming the disinflationary narrative in the U.S. It's hard to find a clear counterargument against the bearish dollar momentum, but the move is looking stretched, so watch for potential temporary corrections,” said analysts at ING, in a note.
The NY Empire state manufacturing index is due later in the session, to be followed later in the week by U.S. retail sales, initial jobless claims and reports on building permits, housing starts and existing home sales.
However, these numbers are unlikely to change the narrative that a 25-basis-point hike from the Fed later this month is likely to be the last one this year.
USD/CNY rose 0.5% to 7.1744 after data released earlier Monday showed China’s second-quarter gross domestic product grew 0.8% from the prior quarter, a substantial slowing from the 2.2% seen in the prior quarter.
On an annualized basis, GDP grew 6.3% in the second quarter, thanks largely to a lower basis for comparison from the COVID-impacted
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