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

During today's Asian trading, the US dollar consolidated against major currencies, as investors took a wait-and-see attitude ahead of the publication of US inflation data that will help clarify the prospects for easing the Fed's monetary policy.

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 0.01% to 105.31. Recent US data indicate a slowdown in the economy, and market participants want to know how stable inflation is - 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. The downward trend in inflation was interrupted in the first quarter, which raised concerns about a renewed acceleration in price growth, and increased concerns about a later and less easing of the Federal Reserve's policy this year. Experts expect to see some progress in April, although the figures are likely to remain relatively stable and will only slowly return to 2%. In particular, the CPI is projected to have increased by 0.3% m/m after an increase of 0.4% in March. Meanwhile, core inflation - excluding food and energy - probably rose by 0.3% over the month and 3.6% per annum, which is a three-year low. Although inflation has remained steady in recent months, it is unlikely that the underlying trend is accelerating again. The pressure in the supply chain is not easing as quickly as it did a year or two ago, but it is not increasing either. Housing inflation looks set to continue to decline this year, while service sector inflation, with the exception of housing, should benefit from a more moderate increase in the cost of producing goods and a gradual easing of the tight labor market. According to the CME FedWatch Tool, markets see a 3.5% probability of a 25 basis point rate cut at the Fed meeting in June, a 25.4% probability of a rate cut in July, and a 61.2% probability of monetary policy easing in September.

The Chinese yuan fell 0.1% against the US dollar, reaching its lowest level since April 30, while investors awaited an announcement from the United States of new China tariffs. Meanwhile, the data showed that in April the CPI grew by 0.3% per annum, accelerating compared to March (+0.1%), and exceeding economists' forecasts (+0.1%). The core CPI, excluding volatile food and fuel prices, rose by 0.7% per annum after an increase of 0.6% per annum in March. On a monthly basis, the CPI increased by 0.1%, while economists had expected a decrease of 0.1%. In March, the CPI fell by 1%. Experts said that if food and energy prices are excluded, inflation data suggest a recovery in demand, especially in the service sector. The report also showed that the producer price index fell by 2.5% per annum in April, slowing down compared to March (-2.8%), but extending the decline period of one and a half years. Meanwhile, on Friday, the Central Bank of China said it would make monetary policy flexible, precise and effective and would promote moderate consumer price growth to consolidate the economic recovery.