The U.S. dollar was up slightly this morning against emerging market and commodity currencies following a decline in the Chinese equity markets. This morning, the Shanghai Composite Index fell more than 3% as concerns about global growth again rattled investors.
Chinese investors jumped back into stocks on Monday in heavy volume trade that pushed prices to seven-week highs, boosted by hopes for more economic stimulus after the central bank expanded a scheme that increases banks' ability to lend.
The dollar fell to one-week lows against the euro and yen on Thursday as investors grew cautious about the impending release of minutes of last month's U.S. Federal Reserve meeting, which could shed more light on the central bank's somber outlook on growth and interest rates.
Over the last 24 hours, Fed Chair Janet Yellen came out with a relatively hawkish outlook on monetary policy, stating that she still expects a rate hike “later this year,” that US economic prospects “generally appear solid,” and that the FOMC does not expect recent global financial developments to significantly affect policy.”
The U.S. dollar was gaining this morning on a stronger-than-expected GDP report, rising expectations of a Fed rate hike, and easing concerns about global growth. Second quarter GDP was up 3.9%, well ahead of consensus expectations of 3.7%.
The U.S. dollar saw gains after a critical manufacturing report in China signaled the world’s second-largest economy is slowing down. Today’s insight includes a bounce-back for oil prices, economic concerns Down Under, testimony from European Central Bank head Mario Draghi and the world’s reaction to China’s slowing economic growth.