Asian session review: the US dollar stabilized against major currencies

During today's Asian trading, the US dollar consolidated against major currencies, while the swiss franc and the japanese yen, which are seen as safe-haven assets, rose moderately amid escalating conflict in the Middle East.

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 0.03% to 106.19. Yesterday, the index added 0.2%, as mixed data from the United States did not affect the opinion of market participants that the Fed is likely to postpone rate cuts until the end of this year. Meanwhile, the president of the Federal Reserve Bank of New York, John Williams, said that he did not feel an urgent need to lower rates. He noted that the Fed's rates did not lead to a strong slowdown in the economy, and, in his opinion, monetary policy is in a good position. Williams added that the rate cut would depend on economic activity. In turn, the president of the Federal Reserve Bank of Atlanta, Rafael Bostic, said that the Fed still has room to move in the fight against inflation. He also suggested that the Fed will be able to cut rates only by the end of the year. According to the CME FedWatch Tool, markets see a 18.6% probability of a 25 basis point rate cut at the Fed meeting in June, and a 45.5% probability of a rate cut in July (compared to 56.5% a week earlier). In addition, markets now expect a 39 basis point rate cut by the end of the year - that is, about two rate cuts, where at the beginning of the year they predicted six rate cuts.

The Swiss franc rose 0.4% against the US dollar after the news that Israel attacked Iran. Iranian state media reported that the country's forces had destroyed drones.

The Japanese yen rose by 0.15% against the US dollar, while investors analyzed Japanese inflation data, which showed that overall consumer prices rose by 2.7% per annum in March after an increase of 2.8% per annum in February. Although the cost of gasoline was lower than a year ago, food inflation recorded an increase. That continued an upward trend started in April 2022, when inflation rose above the BOJ's target for 2% for the first time in 13 years. It has since stayed above that level. Economists said inflation could rise at a faster pace in the coming months if the government lifts utility subsidies as planned at the end of May. The BOJ's policy board is scheduled to release its quarterly outlook on prices next week.