Dollar was under much selling pressure after released of the dovish and non-committal FOMC minutes overnight but stabilized a bit today. Despite improvement in various macroeconomic indicators, policymakers believed that more evidence is needed to show that inflation is moving toward goal and the job market improvement is sufficient and sustainable, before they would adopt a rate hike. Although one member preferred to hike interest rates in the July meeting, 'most judged that the conditions for policy firming had not yet been achieved, but they noted that conditions were approaching that point'. The member opting for tightening was also willing to wait for additional data to confirm a judgment to raise the target range. US dollar dropped but bonds strengthened after the minutes on diminished expectations of a rate hike in September. Futures showed that the market is priced in a 36% probability of a rate hike next month, down from about 50% before the minutes were released.
More in July FOMC Minutes Dampened September Tightening Hopes
Elsewhere, global equities markets are under some selling pressure and weakness in China continued. The Shanghai Composite index dropped -129.8 pts, or -3.4% to close at 3664.29. It's reported that 3500 is now the new make-or-break level for the Chinese government. There were talk since last week that the authority pared back efforts in intervention. But a break of 3500 could prompt another round of massive intervention again. Meanwhile, IMF signed that Yuan won't be added into the basket of reserve currencies in the Special Drawing Rights until September next year. Instead, an extension was approved for the current basket. The PBoC set the yuan exchange rate sharply higher today, at 6.3915 per US dollar, comparing to 6.3963 a day earlier.
In Europe, it's reported that Greece repaid EUR 3.4b to ECB after receiving its first tranche of bailout funds from ESM. German PPI rose 0.0% dropped -1.3% yoy versus expectation of -0.1% mom, -1.4% yoy. Swiss trade surplus came in wider than expected at CHF 3.74b. UK retail sales rose 0.1% mom in July. A number of data will be released from US today, including jobless claims, existing home sales, leading indicators, Philly Fed survey.