Asian session review: the US dollar stabilized against major currencies

During today's Asian trading, the US dollar consolidated against major currencies as investors remain cautious ahead of the publication of the PMI indices for June.

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) fell by 0.02% to 105.56. Yesterday, the index rose by 0.36%, which was mainly due to the fall of the pound and the swiss franc against the backdrop of the results of the central bank meetings. The Bank of England left the interest rate at 5.25%, but signaled the possibility of easing policy in August, while the Swiss National Bank cut interest rates by 0.25%, to 1.25%. Today, the focus of investors' attention will be on the US PMI data. Economists expect the manufacturing PMI to fall to 51.0 in June from 51.3 in May, and the services PMI to drop to 53.7 from 54.8. Weaker-than-expected data may strengthen the case for the start of the Fed's monetary easing cycle in September. According to the CME FedWatch Tool, markets see a 10.3% probability of a 25 basis point rate cut at the Fed meeting in July, a 64.1% probability of a rate cut in September, and a 76.7% probability of monetary policy easing in November.

The yen continued its decline against the US dollar, breaking the 159 level and reaching a new 8-week low. The yen remains under pressure after the Bank of Japan decided last week to hold off on reducing bond buying stimulus until the July meeting. Meanwhile, Japan's chief currency diplomat Masato Kanda said today that the government is ready to take further "decisive" action against "speculative, excessive volatility."