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By Swati Pandey
SYDNEY (Reuters) – Asian stocks started the week on a more subdued note on Monday after posting their first weekly dip since the start of June, as the dollar was on the defensive ahead of China's key economic data.
Trade should be light, Japan being closed for a holiday.
The MSCI's largest share of Asia Pacific's shares outside Japan was slightly below 524.9 points. It dropped by just over 1% last week after five consecutive weeks of gains.
Australian equities declined 0.8%, while South Korean shares declined 0.3%.
Markets will focus on Chinese GDP data expected at 0200 GMT, where analysts expect Q2 growth to slow to 6.2% from the previous year – the lowest annual rate since the beginning of 1992.
A disappointing figure would fuel worries about slowing global growth and bolster arguments for an increased stimulus from Chinese authorities as a damaging trade war with the United States rages on.
In addition to GDP, China will also release activity data for June, including retail sales, industrial production and urban investment, which could give more clues as to whether Earlier support measures are starting or if a relaxation of the policy is needed.
"The sluggishness of the Chinese economy may not disappear soon due to internal and external difficulties," ANZ analysts said.
"To stabilize growth, the People's Bank of China (PBoC) will maintain an accommodating bias for the rest of the year, in our view."
Later in the week, US retail and industrial production data will provide more clues to the health of the world's largest economy. The US Federal Reserve will release on Wednesday its "Beige Book", in which investors will be on the lookout for comments on the impact of trade tensions on business prospects.
In the currency markets, the greenback was stable at 97.818 against a basket of major currencies.
The decline was observed for three consecutive days as markets fully anticipated the possibility of a 25 basis point (bps) cut in US interest rates. There is also a low probability of a 50 bp cutoff.
Against the Japanese yen, the dollar touched the lowest since early June at 107.81, while the single currency remained virtually unchanged at 1.1271 dollars after three sessions of successive gains.
Expectations that the Fed will maintain its favorable rates have pushed the US Treasury bonds to recover over 10 years under the current range of Fed rates ranging from 2.25% to 2.2%.
"The Fed's dovish rhetoric has made the interest rate cut in July, in the eyes of the market, as a fait accompli: it's not if we reduce, but to what extent," Morgan Stanley Hans Redekar (New York Stock Market strategist), Hans Redekar, explained to customers his rating.
Redekar said the bank was returning to its short dollar / yen long position.
"If the markets are disappointed, the yield curve should flatten, the US dollar strengthen and financial conditions tighten, and these factors would exacerbate the already formidable hurdles facing the global economy," he said. -he adds.
"Global reflation requires a lower USD to support world trade and commodity prices."
Concerns over global growth and low inflation have pushed investors to accumulate money on bonds and money market funds, said Jefferies, citing his global tracker of asset flow .
"The danger is that with a mountain of cash in money market funds, a commercial ceasefire would bring about a drastic change in safe assets," said Sean Darby, Jefferies global equity strategist.
"At the moment, investors do not seem particularly eager to buy stock.Revisions of results have not yet reached their low point, while the economic surprises are rare", he added.
"The bottom line is that we take a break from the risk gathering."
In commodities, it fell 6 cents to 60.15 dollars a barrel. was 7 cents at $ 66.65.
Gold was a little higher at 1,416.14 ounces, not far from a $ 1,438.60 high over six years.
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