China: Growth risks and stimulus watch – TD Securities

TD Securities' Alex Loo points out that China's July economic data revealed weaker industrial production, slight retail sales growth, and a record-low Fixed Assets Investment, raising worries about insufficient domestic demand. The report states that if this economic slowdown persists, Beijing might struggle to meet its 2026 GDP target of 4.5–5.0% and could issue stronger counter-cyclical measures at the September Politburo (Economic) meeting.

China's economic indicators deteriorated in July, marking the start of a weak second half of 2026. Should economic momentum continue to decline, policymakers may fall short of their GDP objective for 2026 and witness fresh stimulus announcements at the upcoming September Politburo meeting. The prevailing economic narrative for China remains unchanged; the lack of domestic demand continues to pose a significant challenge for Chinese policymakers.

Economic momentum is weakening, and if August economic data fails to indicate a rebound, it could pose a major concern for policymakers. The next potential venue for significant stimulus would be the September Politburo (Economic) meeting. If economic momentum continues to weaken, policymakers might miss their 2026 GDP target of 4.5–5.0% and witness additional stimulus announcements at the September Politburo meeting.

(This report was generated with assistance from an AI tool and reviewed by an editor. More information available.) The FXStreet Insights Team, composed of journalists, selects market observations from respected experts, incorporating insights from commercial analysts and additional perspectives from internal and external contributors.

GBP/USD continued its upward trend on Friday, briefly reaching a three-month high near 1.3570 before easing on Monday. Diminished expectations of a Federal Reserve rate increase in September contributed to the Greenback's decline, enabling Cable to maintain its bullish stance ahead of the UK jobs report release on Tuesday. EUR/USD stabilized its daily gains well above the 1.1500 level following Wall Street's close on Monday.

The pair's multi-day rally stems from ongoing US Dollar selling pressure, as investors continue to reduce expectations of Fed rate hikes. Upcoming economic data includes Germany's ZEW surveys on Tuesday and a range of US economic indicators. Gold experiences a slight loss of momentum, trading near the $4,400 per troy ounce mark on Monday, supported by the relatively stable US Dollar amid expectations of limited Fed tightening in the coming months.

The majority of economists anticipate the Federal Reserve (Fed) to maintain interest rates unchanged in September and throughout the year, according to a Reuters poll conducted between August 12 and 17.