Asian session review: the US dollar stabilized against major currencies

During today's Asian trading, the US dollar consolidated against major currencies, while investors are cautious ahead of the release of important US economic data. Politics will also be in focus: the first U.S. presidential debate between President Joe Biden and his predecessor Donald Trump set for Thursday.

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 0.01% to 105.47. Yesterday, the index fell by 0.35%, retreating from its highest level since May 1. The focus this week will be on the publication of the U.S. personal consumption expenditures (PCE) price index (on Friday), based on which the Federal Reserve evaluates progress in reducing inflation to the target level of 2%. Data indicating a weakening of price pressure is likely to increase the likelihood of a rate cut in September. Economists predict that the PCE remained unchanged in May compared to April, while core PCE growth slowed to 0.1% from 0.2%. 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 67.7% probability of a rate cut in September, and a 79.8% probability of monetary policy easing in November. 

The yen rose 0.1% against the US dollar, to 159.40, after coming close to the psychological level of 160 yesterday, which had prompted a currency intervention from Tokyo in late April and early May. Overall, fears of another currency intervention by Japanese officials provide little support to the yen. Meanwhile, data showed that Japan's leading index fell to a 3-month low in April. The leading index, which measures future economic activity, dropped to 110.9 from 111.7 in the previous month. Meanwhile, the coincident index strengthened to 115.2 from 114.2 in March. The lagging index decreased to 105.9 in April from 106.1 in the preceding month.