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The White House said on Monday it expected China in coming days to escalate its response to a potential visit by US House of Representatives Speaker Nancy Pelosi to Taiwan and said the United States would not be intimidated.
The US dollar edged lower on Monday, although the slide pared mid-US session as Wall Street lost its earnings-inspired strength and lost some ground. Investors and market participants are exceptionally focusing on the risk of a global recession.
Economic Data
The US July ISM Manufacturing PMI fell by less than anticipated, down from 53 in June to 52.8. A sharp drop in prices paid hints at easing inflationary pressures, but new orders also contracted, according to ISM, in line with increased risks of a recession.
German retailers ended the first half of 2022 with the sharpest year-on-year sales drop in nearly three decades, as inflation, the Ukraine war and the coronavirus pandemic take their toll, data showed on Monday.
Retail sales in June decreased 8.8% in real terms compared with the same month last year, the biggest drop since the time series began in 1994, said the Federal Statistical Office. Analysts polled by Reuters had predicted a drop of 8.0%. Retail sales also unexpectedly fell compared with the month before: June retail sales fell 1.6% in real terms, versus analysts’ predictions of a 0.2% increase in a Reuters poll.
Additional Developments
At the beginning of the day, China published the official NBS Manufacturing PMI, which contracted to 49 in July, worse than anticipated, while the services index came in better than expected, improving to 53.8. Also, S&P Global downwardly revised its Manufacturing PMIs for some European countries and the United States.
The yield on the 10-year US Treasury note ticked lower and is currently around 2.59%, while the 2-year note yields 2.89%, unchanged for the day.
The EUR/USD pair neared the 1.0280 area again, finishing the day at 1.0255. GBP/USD extended gains beyond 1.2200, now changing hands at 1.2250. The AUD/USD pair trades above 0.7000 as market players await the RBA monetary policy decision. The central bank is widely anticipated to hike rates by 50 bps, although it is unclear if they can hike by more or less.
USD/CAD surged amid lower oil prices, ending the day at 1.2845. Crude oil prices edged lower, losing roughly 4% on Monday amid fears of easing demand, following weaker than expected Chinese figures released at the beginning of the day. WTI settled at $93.80 a barrel.
Gold continued to advance, reaching an intraday high of $1,775.43 a troy ounce, trading nearby early in the Asian session and safe-haven currencies advanced against the US dollar. USD/CHF trades around 0.9500 while USD/JPY ended the day at 131.65.
During its meeting, on Tuesday, August 2, the Reserve Bank of Australia is expected to hike the cash rate by 50 bps. Smaller rate hike has more chances than a larger one, as the RBA has to deal not only with raising inflation but also with slowing growth.
Also Read:
EUR/USD Impacted By Eurozone Retail Sales
Reserve Bank of Australia Decision Preview
White House: US will not be intimidated by China
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Weak Global Manufacturing Data Adds To Recession Fears
AUD/USD rallies ahead of RBA’s rate decision
Fed expected to lift policy rate to 3.5-3.75% by end of 2022
US Stocks fall starting August lower amid earnings, data flood
