Asian session review: the US dollar is showing positive dynamics

During today's Asian trading, the US dollar rose slightly against major currencies, and is preparing to record the first weekly increase in the last three weeks, while market participants continue to mull over the outlook for Fed 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 0.14% to 104.32, retreating from the lowest level since March 21, reached yesterday. Since the beginning of the week, the index has gained 0.21%. Experts said that markets are now facing many different challenges, including growing expectations of a Fed rate cut and a potential victory for Republican presidential candidate Donald Trump. Today, investors will continue to analyze the statements of Fed policymakers, hoping to get new clues about the timing and pace of monetary policy easing: FOMC member Williams will give a speech at 14:40 GMT, and FOMC member Bostic at 17:00 GMT. According to the CME FedWatch Tool, markets see a 4.7% probability of a 25 basis point rate cut at the Fed meeting in July, a 96.2% probability of a rate cut in September, and a 98.5% probability of monetary policy easing in November.

The yen fell by 0.25% against the US dollar, despite favorable inflation data, which strengthened the arguments in favor of an interest rate hike by the Bank of Japan. The Ministry of Internal Affairs and Communications said that in June, core inflation that excludes fresh food edged up to 2.6% from 2.5% in May. However, economists had expected a 2.7% increase. The consumer price index excluding prices of fresh food and energy also rose marginally to 2.2% from 2.1%. At the same time, headline inflation held steady at 2.8%. Economists believe that underlying inflation is likely to remain around 2% until early-2025. This will prompt the Bank of Japan to hike rates both this month and in October. The next policy announcement is due on July 31. Traders are now estimating a 41% chance of a 10 basis point rate hike in July.