Asian session review: the US dollar traded steadily against major currencies

During today's Asian trading, the US dollar consolidated against major currencies amid a shortage of new catalysts, while market participants took a wait-and-see attitude ahead of the publication of US inflation data, which will be presented next week.

The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) rose by 0.05% to 105.60. As for the US data, a report on producer prices for April will be released on Tuesday, and the consumer price index for April will be published on Wednesday. Traders will watch for signs that inflation has resumed its downward trend toward the Fed's 2% target rate. Yesterday Fed Bank of Boston President Collins said that the U.S. economy needs to cool to return inflation back to target. Following recent weak US employment data, money markets expect the Fed to reduce borrowing costs by about 40 basis points by the end of 2024, which implies about two 0.25% rate cuts. According to the CME FedWatch Tool, markets see an 8.7% probability of a 25 basis point rate cut at the Fed meeting in June, a 31.4% probability of a rate cut in July, and a 65.7% probability of monetary policy easing in September.

The yen fell by another 0.15% against the US dollar, to 155.70, extending its losses since the beginning of the week to 1.8%. Meanwhile, minor support for the yen was provided by the BOJ's summary of opinions, which showed board members were overwhelmingly hawkish at their April policy meeting with many calling for steady interest rates hikes. Meanwhile, experts warn that since traders are still afraid of possible currency intervention by the Japanese government, the USD/JPY is likely to remain in the range of 155-160. Today, Japan's chief currency diplomat Masato Kanda repeated the warning that Tokyo is ready to take action on the foreign exchange market.

The pound fell 0.1% against the US dollar, while investors are cautious ahead of the Bank of England meeting, the results of which will be announced at 11:00 GMT. Economists expect the Central Bank to leave the interest rate at 5.25% (the highest value since the beginning of 2008). The Bank of England is also slated to publish its economic analysis as well as inflation projections. Although markets see a dovish stance today, the Central bank is widely expected to cut the rate by 0.25% at the next meeting in June.