Market Highlight 25.07.2024

In July, business activity in the U.S continued to grow, reaching its highest level in 27 months. However, businesses are facing challenges in encouraging consumers to increase spending on goods. According to S&P Global, the preliminary composite PMI, which includes both manufacturing and services, rose to 55 points this month, up from 54,8 in June. This indicates that the economy remains robust at the start of Q3. The Q2 GDP report, expected tonight, is anticipated to show a growth recovery of 2%. The USD Index slightly declined by 0,13% yesterday but dropped more significantly against the JPY by 1,1%, due to expectations that the Bank of Japan might raise policy rates and announce plans to reduce its bond-buying program. The market will closely monitor the preliminary Q2 GDP data tonight and the Personal Consumption Expenditures (PCE) Price Index report on Friday, which the FED uses to track inflation, for new policy signals ahead of their mid-week meeting next week.

Last night, the Bank of Canada announced a further 0,25% cut in its base interest rate, bringing it down to 4,5%, and indicated that rates could be reduced further if inflation continues to cool as expected. In June, the BOC was the first central bank in the G7 to begin easing monetary policy, with the next rate cut expected in September.

The interbank USD/VND exchange rate declined yesterday, falling back below 25.360, despite briefly rising to nearly 25.400 during the day. Market sentiment remains cautious, awaiting key U.S economic data later this week and the FED's July policy meeting next week.

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