US dollar slumps as the market leans into China stimulus

We’re sorting through some quarter-end flows at the moment so I’m suspicious of FX moves but the euro, pound and antipodeans in particularly are climbing on this move in the dollar.

China didn’t offer a full picture on fiscal support today but said it would offer the “necessary spending” to meet this year’s 5% target. We did get some subsidies for the poorest, for families with more than 1 child and extra cash for banks. The signals is that more is coming and China-related equities absolutely love it.

There are macro knock-ons though and it should be good news for Europe’s beaten-up manufacturing and export segments. A stronger Chinese economy is also a boost for all global growth trades, including commodities. The caveat is that inflation could be re-invigorated.

So far the market response is impressive and this allays the fears I highlighted yesterday.

Cable is near the highest since 2022.

This article was written by Adam Button at www.forexlive.com.