China looks to stimulate their growth
WEEKLY MARKET COMMENTARY |
This week global investors will be focused on the relationship between the U.S. dollar, crude oil and the Chinese yuan as well as the release of the Federal Reserve Open Market Committee minutes from the July meeting.
In light of recent financial turmoil in Chinese markets, the depreciation of the yuan and the secular slowing in China’s growth may be enough for fiscal and monetary authorities there to initiate more aggressive policy action to prop up growth. During the next few months it would not be surprising to see the Peoples Bank of China cut interest rates, the Financial Ministry to announce the start of a new fiscal stimulus program, and to see further moves to slowly devalue the currency. A look at the 12-month non-deliverable forward implies a move of the yuan to somewhere between 6.5 and 6.55 during the next year.
Meanwhile, the U.S. will see a spate of top-tier data this week. Fresh information on inflation, housing, regional manufacturing and first time jobless claims will all be published.