During today's Asian trading, the US dollar fell slightly against major currencies amid news that President Joe Biden has dropped out of the 2024 presidential race and endorsed Vice President Kamala Harris as the Democratic Party's nominee.
The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) fell by 0.16% to 104.23. Experts said Biden's decision to drop out blows open the presidential race less than four months before Election Day. It also poses extraordinary questions and challenges for the Democratic party, which now must scramble to assemble a new presidential ticket. The next candidate will need to compete against the Republican ticket of Trump and Sen. JD Vance, win over donors, delegates and other allies who were loyal to the incumbent. Kamala Harris quickly received the backing of many within the party, but several high profile names stayed quiet, including former House of Representatives Speaker Nancy Pelosi.
The yen rose 0.7% against the US dollar, despite the absence of any catalysts for such a large-scale movement. However, speculation continued over the chance of a rate hike at the Bank of Japan's July 30-31 meeting, although rate hike bets decreased a little amid a lack of media reports over the weekend supporting that possibility. Questions also remain regarding the pace and scale of JGB purchase cuts that the bank will announce this month.
The Chinese yuan fell slightly against the US dollar after the Central Bank of China unexpectedly reduced a key short-term policy rate and its benchmark lending rates. The People's Bank of China (PBoC) cut the interest rate on seven-day reverse repos to 1.7% from 1.8%. The action was aimed to strengthen counter-cyclical adjustments to better support the real economy, the central bank said. The PBoC also lowered the one-year loan prime rate to 3.35% from 3.45%. Similarly, the five-year LPR, the benchmark for mortgage rates, was trimmed to 3.85% from 3.95%.