Chinese data and demand for USD
US dollar declined this week versus most of its major counterparts. However, on Friday the greenback managed to pull back a bit as the markets grew cautious ahead of Chinese growth data release on Monday.
According to the median forecasts, Chinese GDP growth slowed to 7.5% in Q2. Many experts think that this figure may come lower due to the recent disappointing readings from China.
Brown Brothers Harriman points out that “the market is looking for some new good or bad factors, but there’s not so much information, except for US Treasury yields.” USD follows the dynamics of American yields. Benchmark US 10-year yields reached a 23-month high on Monday, but then fell sharply after Bernanke said on Wednesday that a highly accommodative monetary policy was needed for the foreseeable future.
Note that now investors probably won’t be so eager about buying USD. JPMorgan warns about the increased risk of deeper pullback.