Asian session review: the US dollar stabilized 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, which may provoke a revision of expectations regarding the timing of the Fed's monetary policy easing. However, trading activity today is likely to be low due to the Easter holiday in several markets.

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 0.04% to 104.60. As for the data, the February report on personal income and spending will be published at 12:30 GMT. The report contains the Fed's preferred inflation indicator, the core personal consumption expenditure price index (PCE). The core PCE is expected to have risen 0.3% in February after increasing 0.4% in January. On an annual basis, the core PCE is projected to have grown by 2.8%, as in January.  Stronger than expected data may give momentum to the dollar and strengthen the likelihood that the Fed will keep rates at the current level for a longer time. According to the CME FedWatch Tool, markets see a 4.2% probability of a 25 basis point rate cut at the Fed meeting in May, and a 63.6% probability of a rate cut in June (compared to 75.6% a week earlier).

The yen remained stable against the US dollar, despite Japanese data and statements by Japanese Finance Minister Shunichi Suzuki. He noted that there were "speculative" moves behind recent yen declines, suggesting authorities remained on stand-by to intervene in the market. "It is important that the exchange rates move steadily, reflecting fundamental factors. Excessive volatility is undesirable, and we are watching the market movements from this point of view," he said. However, analysts note that a fairly large gap between interest rates in the United States and Japan gives traders a reason to continue selling the yen. The yen hit a 34-year low against the dollar at 151.975 this week.