Dollar Gains: Market Reactions to China's Stimulus Disappointments

The dollar maintained gains amid tepid moves from major currencies on Monday, focusing on China's lackluster stimulus announcements. The euro and pound faltered, while the dollar index neared a multimonth high. Market disappointment arose from China's broad yet nonspecific debt issuance plans, leaving traders awaiting clearer economic policy steps.

The dollar clung to its gains and even extended some in Asian trading on Monday, as a holiday in Japan diminished liquidity, shifting focus to China's low-impact weekend stimulus announcements. The euro declined 0.13% to $1.0922, while the pound showed little movement but dropped 0.2% at one point. Meanwhile, the dollar appreciated 0.13% against the Japanese yen, trading at 149.2750.

The dollar index hovered just above 103, closing in on last week's peak, its highest since mid-August, due to traders pulling back bets on further major rate cuts by the Federal Reserve at its remaining meetings this year. China's yuan fell 0.2% against the dollar, while the Australian dollar, closely tied to China's economic fortunes, decreased by 0.16% to $0.67385.

In a move to boost its slowing economic growth, China announced over the weekend that it would significantly increase government debt issuance to provide subsidies, support the property market, and replenish state banks' capital. However, Finance Minister Lan Foan offered no concrete figures on the stimulus size, promising more 'counter-cyclical measures' in a press conference. Markets expressed disappointment over the lack of detailed additional stimulus measures, considering them necessary for reviving growth.

(With inputs from agencies.)