China’s Record Capital Outflows Reflect Balancing Act Between Liberalization and Stability

Economic

Summary:

China’s capital outflows hit an unprecedented $58.3 billion in July, fueled by domestic investors’ aggressive purchase of Hong Kong assets and expanded access to offshore debt, while foreign funds continued pulling back from Chinese bonds....

Historic surge in outbound flows

China recorded its highest-ever monthly capital outflows in July, with domestic banks wiring a net $58.3 billion abroad on behalf of clients for securities investment. This marked the largest figure since the State Administration of Foreign Exchange began tracking such flows in 2010. The spike was closely linked to stronger participation in Hong Kong markets and the expansion of the Southbound Bond Connect program, which opened new opportunities for mainland investors to access offshore debt.

The July surge underscores a clear causal relationship between Beijing’s liberalization measures and investor behavior. Regulators’ decision to expand access for non-bank financial institutions, including securities firms and insurers, directly encouraged greater participation in overseas debt markets. Onshore investors purchased 12.6 billion yuan ($1.8 billion) of offshore bonds through the Southbound Bond Connect, the highest monthly total of the year. This reflected both regulatory incentives and rising domestic appetite for portfolio diversification.

At the same time, correlation rather than causation can be observed in foreign fund withdrawals. Offshore institutions reduced their holdings of Chinese interbank bonds by 300 billion yuan, their lowest level since early 2024. This decline aligned with global shifts in risk preference and easing US-China trade tensions, suggesting that reduced foreign demand was influenced more by comparative yield opportunities than by Chinese policy changes alone.

Shifting investor preferences

Foreign retrenchment from Chinese assets was also evident in negotiable certificates of deposit, once a favored instrument among overseas funds. Holdings fell 15% in July, or 167 billion yuan, marking the third consecutive month of accelerated declines. The weakening appeal of such instruments illustrates how shifting global liquidity conditions and expectations of US rate cuts are shaping portfolio allocations.

Meanwhile, China appears prepared to accommodate capital outflows in the near term, leveraging a weaker dollar environment to promote gradual liberalization. By raising quotas for approved outbound investment in June, regulators signaled intent to encourage diversification and support the yuan’s longer-term role in global finance.

Policy implications and outlook

The simultaneous push for capital account liberalization and observed bond outflows highlights a delicate balance for policymakers. While outward investment strengthens the yuan’s global footprint, persistent foreign selling risks undermining confidence in domestic debt markets. Economists, however, argue that the risks are contained due to expectations of narrowing yield differentials with the US as Federal Reserve policy loosens.

China’s record outflows in July capture both the success and the challenges of financial liberalization. Regulatory reforms have stimulated new channels of overseas investment, but foreign retrenchment underscores the fragility of international confidence in Chinese assets. The months ahead will test Beijing’s ability to reconcile its strategic aim of yuan internationalization with the immediate need to sustain stability in domestic capital markets.

Source: Bloomberg

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ING

Economic

Forex

Commodity

US tariffs are already denting European exports

In June, eurozone exports dropped by 2.4% month-on-month and on the year were up by 0.4%. As imports increased by more than 3% MoM, the seasonally-adjusted trade surplus narrowed to €2.8bn, from €15.6bn in May. There is no data on bilateral trade for the eurozone, only for the EU. And the June data shows the expected collapse of European exports to the US (-10% YoY) but also China (-12% YoY). Tariffs and, more structurally, the loss in international competitiveness are highly affecting European exports. Despite talks about finding new trading partners to make up for the potential loss of trade with the US, European exports to India and Brazil, for example, were down by some 5% YoY in June.

More generally speaking, the first months of the year saw highly volatile industrial data in Europe. The up and down was mainly driven by frontloading of US exports ahead of looming tariffs and subsequent reversals. Today’s June data provides a first impression of what could be left of European exports after the first tariff wave. Don’t forget that in June, many European exporters had already been subject to 10% tariffs, automotive producers to 25% and steel and aluminium producers as much as 50%. The 15% tariffs agreed in July became effective on 1 August.

The strengthening of the euro since the start of the year, US tariffs, as well as broader uncertainty regarding the future of global trade and fierce competition for European exporters in general, are likely to weigh on European exports moving forward. Currently, it's hard to see how exports could soon return as a powerful engine of European growth.

Source: ING

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Winkelmann

Forex

Economic

The USDCAD rate corrects amid positive economic data from Canada, currently standing at 1.3802.

USDCAD forecast: key trading points

● Investors focus on Federal Reserve Chairman Jerome Powell’s speech at the Jackson Hole Economic Symposium

● Inflation in Canada slowed, but the Bank of Canada’s preferred gauge remained at 3.0%

● USDCAD forecast for 18 August 2025: 1.3880

Fundamental analysis

The USDCAD rate is declining after rebounding from the 1.3820 resistance level. The US dollar remains under pressure as markets expect the Fed to cut interest rates by 25 basis points in September, with the probability of such a move currently priced at 84%. Investor attention shifts to Federal Reserve Chairman Jerome Powell’s upcoming speech at the Jackson Hole Economic Symposium, which may provide new clues about the future policy path.

Economic data from Canada supported the Canadian dollar. In June, manufacturing sales rose by 0.3%, driven by the oil, coal, and food sectors, while wholesale trade grew by 0.7%, reaching 84.7 billion CAD. These figures highlight the resilience of domestic activity and reduce the risks of a slowdown.Inflation in the country slowed but remains above target. The Bank of Canada’s preferred inflation gauge held steady at 3.0% in June, leaving little reason for accelerated rate cuts and tempering market expectations for more aggressive policy easing.

USDCAD technical analysis

The USDCAD pair is trading within an ascending channel, forming a Triangle pattern. The price is hovering above the EMA-65, reflecting buyers’ local advantage. Consolidation within a narrowing range signals a likely acceleration of movement once one of the boundaries breaks.Today’s USDCAD forecast suggests a breakout above the Triangle’s upper boundary with growth towards 1.3880. The Stochastic Oscillator supports this recovery scenario, with its signal lines exiting the oversold zone, indicating decreased selling pressure.

Consolidation above the 1.3825 level would further confirm the bullish outlook.

USDCAD Consolidates In A Triangle, Investors Await Powell’s Signals_1

Summary

The USDCAD rate remains under pressure, with solid Canadian economic data and persistent inflation supporting the local currency. USDCAD technical analysis points to a high probability of breaking above the Triangle’s upper boundary, with potential growth towards 1.3880.

Source: RoboForex

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Daniel Carter

Economic

Political

A train transports oil tankers in Ajmer on July 7, 2025. Indian exporters are scrambling for options as they seek to mitigate the fallout of U.S. President Donald Trump's threatened tariff salvo against the world's most populous nation.

U.S. President Donald Trump's trade advisor Peter Navarro on Monday called on India to stop buying Russian crude oil, accusing the Asian giant of undermining international efforts to isolate Vladimir Putin's war economy.

Writing in in the Financial Times, Navarro described India's dependence on Russian oil as "opportunistic," adding that if India "wants to be treated as a strategic partner of the US, it needs to start acting like one."

"In effect, India acts as a global clearinghouse for Russian oil, converting embargoed crude into high-value exports while giving Moscow the dollars it needs," Navarro said in the op-ed.

His comments come shortly after trade negotiations between the U.S. and India, which had been scheduled to take place in New Delhi later this month, were reportedly called off.

India's Ministry of Commerce and Industry, and the Office of the U.S Trade Representative did not immediately respond to CNBC's request for comments.

Earlier this month, the Trump administration said it planned to impose an additional 25% tariff on India over Russian oil purchases, bringing the total levies against the country to 50%. The cumulative rate of duties on India is among the highest on any of Washington's trade partners.

India described the move as "extremely unfortunate" at the time, saying the tariffs were "unfair, unjustified and unreasonable."

The White House has since warned that secondary levies on India could increase further, depending on the outcome of Trump's peace talks with Putin.

For its part, India has said it has been unfairly targeted for its continuing trade with Russia since Moscow's full-scale invasion of Ukraine in early 2022, amid criticism from both the U.S. and European Union.

In a statement published Aug. 4, India's Ministry of External Affairs said the country began importing from Russian because traditional supplies were diverted from Europe after the outbreak of the conflict.

"India's imports are meant to ensure predictable and affordable energy costs to the Indian consumer. They are a necessity compelled by global market situation," India's Ministry of External Affairs said.

"However, it is revealing that the very nations criticizing India are themselves indulging in trade with Russia. Unlike our case, such trade is not even a vital national compulsion," it added.

Trump's criticism of India's oil trade with Russia represents a clear shift from the Biden administration, which, along with other G7 nations, Australia and the European Union, established a $60 a barrel price cap in late 2022. The EU has since signaled it has reached an agreement to lower the price threshold.

This mechanism sought to limit Russia's revenue from oil sales, while maintaining some stability in global energy markets.

Shilan Shah, deputy chief emerging markets economist at Capital Economics, said India could, in principle, find suppliers other than Russia to meet its energy needs "relatively easily," with limited economic impact.

"But we doubt that India would make a wholehearted effort to wean itself off Russian oil. Domestically, it would not play well to be seen caving to Trump's demands," Shah said in a note published Aug. 4.

"In addition, Indian policymakers would be reluctant to upend generally cordial (and long-standing) relations with Russia," he added.

Source: CNBC

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Winkelmann

Russia-Ukraine Conflict

Political

Economic

A Russian drone attack on a residential area in Kharkiv killed seven people including a toddler and a 16-year-old boy overnight, Ukrainian authorities said on Monday, as the United States presses Kyiv to accept a quick deal to end the warthat Moscow started.Six children aged 6 to 17 were among 20 other people injured in the attack on Ukraine's second largest city, Oleh Synehubov, governor of the wider Kharkiv region, wrote on Telegram.

The attack came as Ukraine's Volodymyr Zelenskiy was preparing for talks with Donald Trump in Washington later on Monday amid European fears the U.S. president could try to pressure Kyiv into accepting a peace settlement favourable to Moscow.The air force said Russia launched 140 drones against Ukraine overnight, the largest total recorded in a single night since August 4.Kharkiv, which lies near northeastern Ukraine's border with Russia, has been the target of Russian drone and missile attacks throughout the war.

A ballistic missile attack shattered around 1,000 windows in various buildings in the city on Sunday, Synehubov said. Some residents had to be evacuated from their homes, officials said.Reuters witnesses saw medics attending to residents on a street and rescuers inspecting damage to residential buildings."Russia is a murderous war machine that Ukraine is holding back. And it must be stopped through transatlantic unity and pressure," Ukrainian Foreign Minister Andrii Sybiha wrote on X after the attack.He said Russia was continuing to kill civilians despite peace efforts.

Russia says it does not deliberately target civilians. Thousands have been killed since Moscow launched its full-scale invasion in February 2022.Russia fired four missiles overnight as well as the drones, the air force said. It said 88 drones were downed and reported impacts at 25 locations in six different regions.Seventeen people were injured in a morning missile attack that struck unspecified critical infrastructure in the southeastern city of Zaporizhzhia, officials said.

In the Black Sea region of Odesa, an attack caused a large fire at a fuel and energy infrastructure facility, requiring a major firefighting effort, the governor said.Two people were also injured in strikes in the northern region of Sumy, where at least a dozen homes and an educational institution were damaged, authorities said.

Reuters could not independently verify the weapons used by Russia. There was no immediate comment from Moscow.Trump, who hosted President Vladimir Putin in Alaska on Friday for talks aimed at ending the war, has urged Kyiv to make a deal with Moscow, stating, "Russia is a very big power, and they're not."

Source: Reuters

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Samantha Luan

Forex

Political

Economic

While digital assets might seem decoupled, the strength or weakness of the greenback profoundly influences investor sentiment, liquidity, and even the stability of stablecoins. As we approach a pivotal period marked by the Washington Summit and the much-anticipated Jackson Hole Symposium, understanding the US Dollar Forecast becomes paramount for anyone navigating the intricate dance between traditional finance and the burgeoning crypto economy. What does the current upward edge of the Dollar signal, and how might these high-stakes events reshape the financial landscape?

US Dollar Forecast: What’s Driving the Greenback’s Trajectory?

The US Dollar, often seen as the world’s reserve currency and a safe haven, has recently shown signs of renewed strength. This upward momentum is not arbitrary; it’s a complex interplay of various economic indicators and market expectations. Investors are closely monitoring inflation data, employment figures, and global economic stability to gauge the Dollar’s next move. A stronger Dollar can make US exports more expensive but also makes imports cheaper, impacting corporate earnings and consumer spending.

Several factors are contributing to the current US Dollar Forecast:

● Interest Rate Differentials: The Federal Reserve’s stance on interest rates relative to other major central banks remains a primary driver. Higher US rates attract foreign capital, increasing demand for the Dollar.

● Safe-Haven Demand: In times of global economic uncertainty or geopolitical tensions, the Dollar typically strengthens as investors flock to its perceived safety.

● Inflation Expectations: Persistent inflation in the US could compel the Fed to maintain a hawkish stance, supporting the Dollar. Conversely, easing inflation might lead to a more dovish outlook, potentially weakening the currency.

● Economic Growth Outlook: A robust US economy compared to its global counterparts can also bolster the Dollar, reflecting confidence in its future performance.

The Dollar’s recent ascent ahead of key events suggests market participants are bracing for potential shifts in policy or global sentiment that could reinforce its position.

Washington Summit: Navigating Fiscal Policy and Debt Ceiling Concerns

The upcoming Washington Summit is more than just a political gathering; it’s a critical juncture for US fiscal policy that holds significant implications for the Dollar and broader markets. Discussions around the national debt, government spending, and potential tax reforms are on the agenda. Historically, impasses or resolutions in these areas have had immediate and profound effects on investor confidence and currency valuations.

A key focus will undoubtedly be the debt ceiling negotiations. While a default is widely considered unthinkable due to its catastrophic global economic consequences, the brinkmanship involved can create immense market volatility. A swift resolution tends to calm markets and can provide a temporary boost to the Dollar, as it removes a major source of uncertainty. Conversely, prolonged stalemates or unexpected outcomes could trigger risk aversion, potentially leading to a flight to safety within the Dollar itself, but also raising concerns about its long-term stability.

Consider the potential scenarios stemming from the Washington Summit:

Summit Outcome	Potential Dollar Impact	Market Sentiment
Swift Debt Ceiling Resolution	Moderate strength (relief rally)	Positive, risk-on
Prolonged Stalemate/Partial Agreement	Initial weakness, then volatility	Uncertain, cautious
Major Fiscal Policy Shift (e.g., spending cuts)	Variable, depending on perceived economic impact	Mixed, dependent on details

These discussions at the Washington Summit are crucial for shaping the narrative around US economic stability, directly influencing the Dollar’s appeal as an investment.

Jackson Hole Symposium: Deciphering the Future of Monetary Policy Outlook

The Jackson Hole Symposium, hosted annually by the Federal Reserve Bank of Kansas City, is a highly anticipated event where central bankers, finance ministers, academics, and financial market participants from around the world gather. It’s often a platform for significant policy signals and economic insights from the Federal Reserve Chair and other influential figures.

For the Dollar, the Jackson Hole Symposium is a critical barometer of the future Monetary Policy Outlook. Market participants will be dissecting every word from Fed Chair Jerome Powell for clues on the future path of interest rates, the Fed’s stance on inflation, and its overall economic assessment. Will the Fed signal a pause in rate hikes, hint at further tightening, or perhaps discuss the conditions for potential rate cuts? The answers will have profound implications for global capital flows and currency valuations.

Key areas of focus at Jackson Hole Symposium include:

● Inflation Assessment: How does the Fed view the current state of inflation, and what are its projections?

● Interest Rate Trajectory: Any indication of the Fed’s next move on rates will be closely watched.

● Economic Growth Projections: The Fed’s outlook on US economic growth and employment will influence market expectations.

● Quantitative Tightening (QT): Details on the pace and duration of the Fed’s balance sheet reduction could also impact liquidity and the Dollar.

A hawkish tone from the Fed, signaling continued vigilance against inflation and potentially higher-for-longer rates, would likely bolster the Dollar. Conversely, a more dovish stance, indicating a readiness to ease policy, could lead to Dollar weakness. This event is pivotal for understanding the broader Monetary Policy Outlook for not just the US, but also its ripple effects globally.

Forex Market Analysis: Beyond the Dollar – A Global Perspective

While the Dollar takes center stage, a comprehensive Forex Market Analysis requires looking beyond the greenback to understand the broader currency landscape. Major currency pairs like EUR/USD, USD/JPY, and GBP/USD will react dynamically to the Dollar’s movements and the specific economic conditions in their respective regions. The interplay of these currencies reflects global economic health, trade balances, and investor confidence.

For instance, if the Dollar strengthens significantly due to safe-haven demand, it might put pressure on emerging market currencies. Conversely, a weaker Dollar could provide a tailwind for commodity-linked currencies and potentially reduce the debt burden for countries with Dollar-denominated loans. Understanding these cross-currency dynamics is essential for a holistic view of the Forex Market Analysis.

Key aspects of global currency dynamics include:

● Carry Trades: The attractiveness of borrowing in low-interest rate currencies and investing in high-interest rate currencies. Dollar strength can disrupt these.

● Commodity Prices: Currencies of major commodity exporters (e.g., AUD, CAD) are often influenced by global commodity price trends.

● Geopolitical Developments: Regional conflicts or political instability can trigger shifts in capital flows, impacting local currencies.

● Central Bank Divergence: Different paces of monetary policy tightening or easing among central banks can create significant currency movements.

The interconnectedness of the global financial system means that developments in one major currency can have a domino effect, making a broad Forex Market Analysis indispensable.

Strategic Insights for Investors: Navigating Volatility and Opportunity

Given the confluence of the Washington Summit and the Jackson Hole Symposium, coupled with the evolving US Dollar Forecast, investors face both challenges and opportunities. The heightened volatility around these events demands a strategic approach to portfolio management, especially for those with exposure to both traditional and digital assets.

Challenges:

● Increased Volatility: Sudden shifts in policy expectations or economic outlooks can lead to rapid currency fluctuations, impacting asset valuations.

● Inflationary Pressures: Persistent inflation could erode purchasing power and necessitate adjustments in investment strategies.

● Policy Uncertainty: Ambiguity regarding future fiscal and monetary policies makes long-term planning difficult.

Opportunities and Actionable Insights:

● Diversification: Consider diversifying across different asset classes, including a measured allocation to cryptocurrencies, to mitigate risks associated with traditional market volatility.

● Hedging Strategies: For businesses or investors with significant international exposure, employing currency hedging strategies can protect against adverse exchange rate movements.

● Monitor Key Indicators: Stay informed on inflation data, employment reports, and central bank communications. These are critical for anticipating market shifts.

● Focus on Fundamentals: In times of uncertainty, focus on the underlying fundamentals of your investments. For crypto, this means understanding project utility, adoption rates, and technological advancements.

● Long-Term Perspective: While short-term volatility can be unsettling, maintaining a long-term investment horizon often helps ride out temporary market turbulence.

Understanding the intricate relationship between the Dollar’s strength, global economic policies, and the broader Forex Market Analysis is vital for making informed decisions. The insights gained from the Jackson Hole Symposium and the outcomes of the Washington Summit will provide crucial clarity for the path ahead, shaping the Monetary Policy Outlook for months to come.

Conclusion: Preparing for Market Shifts

The coming period is set to be a transformative one for global financial markets. The US Dollar’s trajectory, influenced by the high-stakes Washington Summit and the policy signals from the Jackson Hole Symposium, will send powerful signals across the globe. For investors, particularly those attuned to the interconnectedness of traditional finance and the crypto world, staying informed on the US Dollar Forecast and the broader Monetary Policy Outlook is not just prudent, but essential.

These events underscore the intricate web of global economics. The decisions made and signals sent will shape not only currency markets but also influence risk appetite, liquidity, and investment flows into various asset classes, including cryptocurrencies. By carefully analyzing the outcomes of these pivotal gatherings and their implications for the Forex Market Analysis, investors can better position themselves to navigate the challenges and seize the opportunities that lie ahead. Vigilance and adaptability will be your greatest assets in this evolving landscape.

Source: CryptoSlate

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Gerik

Economic

Trump, Putin, and Zelenskyy at Crossroads

U.S. President Donald Trump’s recent diplomatic moves on the Russia-Ukraine war have raised concerns over the direction of American foreign policy and what “peace” might ultimately mean. Following his meeting with Russian President Vladimir Putin in Alaska Putin’s first U.S. visit in over a decade Trump declared that he will pursue a “peace agreement” rather than a ceasefire. This announcement signals a significant policy shift that could place pressure on Ukraine’s President Volodymyr Zelenskyy to accept terms that align less with Ukrainian sovereignty and more with geopolitical deal-making.

While no formal deal was struck at the summit, Trump’s rhetoric over the weekend was direct: Zelenskyy “can end the war, or he can continue to fight.” His framing places the burden of continuation on Ukraine, despite Russia’s ongoing occupation of the Donbas region and parts of southern Ukraine. According to the White House, Putin expressed openness to peace if Ukraine received Article 5-like security guarantees from the U.S. and Europe, but also implied that territorial concessions were a precondition a condition unacceptable to Kyiv.

Tina Fordham, a global risk analyst, pointedly stated that “Putin does not take Trump seriously,” highlighting skepticism about the efficacy of Trump’s approach. Richard Portes of London Business School added that Putin merely appearing on U.S. soil was already a symbolic victory for Moscow.

Peace Talks Amid AI Surge and Fed Focus

Beyond geopolitics, markets had a muted but stable reaction. The Dow Jones Industrial Average closed 0.08% higher Friday, with Asia-Pacific markets broadly rising Monday. European bourses opened with modest gains, awaiting further developments in the Trump-Zelenskyy meeting scheduled in Washington.

Meanwhile, tech headlines captured attention as OpenAI reportedly nears a share sale that could value the company at $500 billion, involving investors like SoftBank and Thrive Capital. And in trade diplomacy, a U.S. official visit to India was quietly postponed, signaling possible recalibrations in broader economic policy dialogues.

All eyes are now on upcoming U.S. Federal Reserve communications: meeting minutes will be released Wednesday, and Chair Jerome Powell is set to speak at the Jackson Hole symposium on Friday events that could shape interest rate expectations.

AI Expansion Strains Asian Infrastructure

Parallel to these political maneuvers, Southeast Asia's AI infrastructure boom faces sustainability concerns. Johor, Malaysia, is emerging as a data center hub, but with power and water use soaring, officials have begun to tighten project approvals. This tension highlights a global undercurrent: the energy costs of AI innovation may soon challenge resource-constrained regions even as they benefit from new digital economies.

President Trump’s framing of Ukraine’s war resolution path reveals deep disconnects between Western, Ukrainian, and Russian priorities. What one side views as peace, another may see as capitulation. While diplomacy continues in Washington, the geopolitical and economic reverberations from Zelenskyy’s choices to Fed policy shifts and global tech growth remain far from settled.