The dollar maintains stability as President Joe Biden steps out of the 2024 presidential race. The dollar surpasses expectations as it reaches the annualized rate of 2.8%.
Sean Diddy’s brand thrives; despite his alleged involvement in rap star Tupac’s murder case. An important week for US economic events. All this and more in this issue of FX Parkey Newsletter.
Dollar Stands Firm as Biden Exits 2024 Presidential Race
The U.S. dollar remained relatively stable on Monday following President Joe Biden's surprise announcement that he would not seek reelection in 2024. Biden endorsed Vice President Kamala Harris as the Democratic nominee, potentially setting up a historic race. While some analysts had expected increased volatility, currency markets showed a muted reaction in early trading.
The dollar index, which measures the greenback against a basket of major currencies, was down just 0.1% at 104.30. Traders are now focusing on how the leadership change may impact economic policies and the Federal Reserve's interest rate decisions in the coming months.
BoC Slashes Rates Again as Economy Sputters and Inflation Cools
The Bank of Canada cut its overnight interest rate by 25 basis points to 4.50% on July 24, citing expectations of continued falling inflation and a slowing economy. This marks the second consecutive rate cut, following a similar reduction last month.
The central bank also trimmed its 2024 growth forecast to 1.2%, down from 1.5% predicted in April. Economists now expect two more rate cuts in 2024, potentially bringing the policy rate to 4.00% by year-end. However, sticky core inflation and wage growth could warrant caution in the pace of future rate reductions.
Consumer Spending Surge Drives Surprise Q2 Economic Growth
The U.S. economy grew at a better-than-expected annualized rate of 2.8% in the second quarter of 2024, surpassing economists' projections of 2.1%. This robust growth, up from 1.4% in Q1, was primarily driven by strong consumer spending and a significant increase in inventories. Personal consumption expenditures rose, particularly in the durable goods and services sectors.
The data suggests the economy remains resilient despite elevated interest rates. However, some analysts caution that the inventory buildup could lead to slower growth in coming quarters if consumer demand doesn't keep pace.
July Economic Data to Set the Tone for the Rest of 2024
As July draws to a close, economists and investors are closely watching a series of key economic indicators that could shape expectations for the remainder of 2024. Upcoming releases include U.S. consumer confidence data, durable goods orders, and the Federal Reserve's preferred inflation gauge – the Personal Consumption Expenditures (PCE) index.
Additionally, earnings reports from major tech companies could provide insights into corporate health and consumer spending trends. These data points will be crucial in assessing the strength of the economic recovery and potentially influencing Federal Reserve policy decisions in the coming months.
And that wraps it up, this week’s top news at your fingertips. For any inquiries or feedback, feel free to contact us.
