Speaking at the Economic Conference in Washington, Federal Reserve Chairman Jerome Powell stated that inflation and recent economic data have broadly slowed as the FED expected, indicating that a rate cut is forthcoming. However, he declined to say whether these conditions were sufficient for resuming rate cuts at the policy meeting in two weeks (July 30-31). Overall, the market is nearly certain that the FED will begin cutting rates at the next meeting in September. The FED typically avoids surprising the market with its short-term policy decisions. The likelihood of a rate cut in July dropped from 13% before the Chairman’s speech to about 7% after his comments.
China's economic growth reached +4,7% in the second quarter, the lowest in the past five quarters due to reduced consumer spending. Retail sales in June also grew at the slowest pace since December 2022, indicating that a series of government efforts to boost consumption have not been very effective in reviving the economy’s purchasing power. The Central Committee of the Communist Party of China’s meeting from July 15-18 is likely to focus on solutions to boost domestic demand amid upcoming trade tensions that could further weaken external demand for the country’s exports.
Continuing the downward trend from last weekend, the USD/VND interbank exchange rate closed Monday at 25.370 that corresponding to a decrease of about 45 Dong on the first working day of the week. The broad weakening of the USD, along with some foreign currency inflows into the market, helped ease the exchange rate. The 25.300 - 25z320 range could be the next target for the USD/VND interbank exchange rate this week.
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