Last week, the dollar index (DXY) weakened 2.27% and closed at 99.59, a level last seen on April 2022. This was largely fueled by US inflation data which showed that annual consumer price index (CPI) had dropped to 3% in June which is close to the Fed’s 2% target. This led to the speculation that the Fed may be headed for a final 25 basis point rate hike on its July 26 meeting.

This week started with a flurry of mixed economic data from China. China reported 0.8% GDP growth in quarter two of 2023 versus an expected 2.2%. Year over year GDP rose to 6.3% which was lower than the expected 7.1%, but higher than the previous reading of 4.5%. Chinese industrial production in June was reported at 4.4% which was higher than the expected 2.5% and the previous reading of 3.5%. Retails sales were downbeat at 3.1% while fixed asset investments were upbeat at 3.8%. The unemployment rate remained level at 5.2%. 

While GDP data showed a weakening Chinese recovery, upbeat industrial production data and fixed asset investments showed some hope of economic growth. The People’s Bank of China may let the Yuan to continue depreciating as a form of direct economic stimulus. Chinese stock fell while Japan’s stock market remained closed to celebrate the Marine Day. 

The G20 meetings will be continuing this week and end on Tuesday. The key highlight this meeting is India’s collaboration with the US regarding an investment platform to accelerate India’s transformation to green energy. 

The earnings season is back and banks were the first to report. JPMorgan, Citigroup, State Street, and Wells Fargo all beat earnings estimates and reported better than expected interest income. Goldman Sachs, Bank of America, Schwab, US Bancorp, American Express, and other regional banks are expected to report earnings this week.

Key highlight earnings this week include Tesla and Netflix that will be reporting on Wednesday while American Express will be reporting on Friday. This comes amid a crisis where Hollywood stars, actors, and writers started a strike over the weekend protesting about pay, conditions, and the role of AI in movie production. Tesla investors will be waiting to see the impact of the record 479,700 cars produced in Q2 and the record 466,140 vehicles delivered in the same period on Tesla’s earnings.