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The USD on the defensive as rate cut by FED seems certain now! (Monday, July 15, 2019)

Asian shares started the week on a softer note on Monday after posting their first weekly decline since early June, as China data was more or less in line with expectations. Trading was expected to be light as Japan was shut for a public holiday.

MSCI's broadest index of Asia-Pacific shares outside Japan was a shade lower at 524.9 points. It fell a little more than 1% last week, snapping five straight weeks of gains.

Australian shares slipped 0.8% while South Korea's KOSPI inched 0.3% lower. The Chinese gross domestic product data was as per expectation and has slowed to 6.2% from a year earlier - the weakest annual pace since early 1992. This could add to worries about slowing global growth and reinforce the case for more stimulus by Chinese authorities as a damaging trade war with the United States rages on. Alongside GDP, China will also publish activity data for June including retail sales, industrial production and urban investment, which could give more clues on whether earlier support measures are starting to kick in, or if more policy easing is needed.

Later in the week, US retail sales and industrial production data will provide more clues about the health of the world's largest economy. The U.S. Federal Reserve will release its 'Beige Book' on Wednesday which investors will scour for comments on how trade tensions were affecting business outlook. In currency markets, the greenback was flat at 97.818 against a basket of major currencies.

The dollar index fell for three days in a row as markets fully priced in the chance of a 25-basis-point (bps) cut to U.S. interest rates. There is also a small probability of a 50 bps cut.

Against the Japanese yen, the dollar languished near the lowest since early June at 107.81 while the single currency was mostly unchanged at $1.1271 after three successive sessions of gains. Expectations that the Fed will keep rates supportive have sent bonds rallying with ten-year U.S. Treasuries below the current Fed rate range of 2.25%-2.50%. Worries about world growth and low inflation has meant investors are piling money onto bonds and money market funds. In commodities, U.S. crude fell 6 cents to $60.15 a barrel. Brent crude was off 7 cents at $66.65. Gold was a touch higher at 1,416.14 an ounce, not far from a recent six-year top of $1,438.60.