Asian session review: the US dollar was little changed against major currencies

During today's Asian trading, the US dollar consolidated against major currencies, as investors generally stuck to their views of the expected timing and extent of Fed rate cuts this year.

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 0.02% to 104.58. Since important US data is not scheduled to be published this week, market participants are waiting for further comments from Fed policymakers, which may clarify the trajectory of the Central Bank's policy. Yesterday, several Fed officials urged continued caution, even after data last week indicated a decline in inflation in April. Overall, experts expect subsequent statements by Fed policymakers to signal a continued patient approach to easing monetary policy. According to the CME FedWatch Tool, markets see a 3.6% probability of a 25 basis point rate cut at the Fed meeting in June, a 23.6% probability of a rate cut in July, and a 61.8% probability of monetary policy easing in September.

The pound rose 0.1% against the US dollar, while investors are preparing for tomorrow's publication of UK inflation data, which will help assess the possible timing of an initial rate cut by the Bank of England. Recent trends of a gradual slowdown in inflation, combined with improving sentiment, should force Bank of England policymakers to wait until August before cutting rates by 25 basis points. On the price front, economists expect headline inflation to slow to 2.1% year-on-year in April, with core inflation falling to 3.6%. Services inflation - a concern for Bank of England policymakers as it has remained high recently - is expected to have fallen to 5.4%.