Asian session review: the US dollar has stabilized against major currencies

During today's Asian trading, the US dollar was almost unchanged against major currencies, while investors are cautious ahead of the release of important US data that will help clarify the trajectory of the Fed's interest rates.

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 0.06% to 104.25. Meanwhile, since the beginning of October, the index has gained 3.45%, which is the largest increase since April 2022. This week, the markets will receive a number of important statistical data, including the Federal Reserve's preferred inflation indicator (the core personal consumption expenditures price index), the preliminary report on US GDP for the 3rd quarter, as well as a lot of data on the US labor market, the most important of which is the October employment report, which is scheduled for publication on Friday. According to the CME FedWatch Tool, markets see a 98.9% probability of a 0.25% rate cut at the November meeting (compared to 91.8% a week earlier) and a 74.3% probability of a 0.25% rate cut in December (compared to 66.2% a week earlier).

The pound fell 0.1% against the US dollar, with traders rushing to hedge against big price moves, with just hours to go before Labor finance minister Rachel Reeves' first budget. The Labor Party's first budget in 14 years will end months of speculation about how much Reeves and Starmer will borrow to invest in infrastructure and how much it will hit taxpayers. Analysts expect that the budget will include key budget reforms, including tax changes and wage adjustments, which can significantly affect the situation in the industry.

The Australian dollar consolidated against the US dollar, despite the Australian inflation data. The Australian Bureau of Statistics said that in the 3rd quarter, CPI growth slowed to a 3.5-year low, but core inflation was higher than forecasts and increased expectations that the Central Bank will not start cutting rates until next year. The CPI rose by 0.2% QoQ, while economists had expected an increase of 0.3%. In annual terms, CPI growth slowed to 2.8% from 3.8% in the 2nd quarter. Consensus estimates suggested an increase of 2.9%. Meanwhile, trimmed mean CPI increased by 0.8% in the quarter, just above forecasts of a 0.7% gain. The annual pace though slowed to 3.5% from 4.0%. Overall, the CPI report was quite mixed and investors slightly pared the chance of a rate cut this December and next February to just 24% and 44%.