Dollar Declines After Biden’s Decision
The U.S. dollar declines amid political uncertainty. President Biden decided to end his re-election campaign. This move created political uncertainty. The dollar index dropped 0.2% to 103.942.
Analysts noted Biden’s endorsement of Vice President Kamala Harris. Investors are now focusing on her potential candidacy against Donald Trump. This speculation affected the dollar’s strength.
The dollar had initially gained due to Trump’s rising popularity. Biden’s previous debate performance had been weak. Concerns about his age and health also played a role.
This week’s key economic data release is the PCE index on Friday. Economists predict a 0.1% rise in the index for June. This could influence the Federal Reserve’s decision on interest rates in September.
Euro Rebounds Despite ECB’s Decision
The euro rose 0.2% to 1.0893. This followed last week’s European Central Bank meeting. The ECB decided to keep rates steady. Analysts expected no significant policy changes soon.
Upcoming eurozone business sentiment readings are crucial. These readings will shape the market narrative. If sentiment is weak, the euro might face more pressure.
Markets are currently pricing in two ECB rate cuts this year. This expectation continues to influence the euro’s performance.
GBP and Other Currencies React
The British pound also gained, trading 0.1% higher at 1.2931. The Labour Party’s decisive election victory boosted the pound. This ended 14 years of Conservative rule.
Analysts suggest the pound’s strength is due to persistent UK inflation. Limited pricing of BoE rate cuts also played a role.
In Asia, the yuan weakened after the PBOC cut its loan prime rate. This unexpected move aimed to support China’s slowing economy. The yuan’s decline was further pressured by concerns over a Trump presidency.
Yen Experiences Volatility
The yen fell 0.5% to 156.63. Speculation about Japanese government intervention caused wild swings. The yen’s volatility remains a significant market focus.
