Asian session review: the US dollar is showing positive dynamics

During today's Asian trading, the US dollar rose slightly against major currencies, continuing yesterday's increase, while investors prepare for the release of US economic data.

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 0.10% to 105.72. As for the data, the final report on US GDP for the 1st quarter will be presented on Thursday, and the personal consumption expenditures (PCE) price index will be released on Friday. Economists predict that the core PCE increased by 0.1% m/m in May after an increase of 0.2% m/m in April. This will be the weakest monthly growth since November 2023. Year-on-year, the core PCE is projected to grow by 2.6%, which will be the smallest increase since March 2021. If the actual data meet expectations, this will increase the likelihood of easing the Fed's monetary policy in September. 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 65.9% probability of a rate cut in September, and a 77.7% probability of monetary policy easing in November.

The Australian dollar rose 0.6% against the US dollar, helped by Australian inflation data, which increased the likelihood of another rate hike by the RBA. The Australian Bureau of Statistics said that in May, CPI growth accelerated to 4.0% per annum from 3.6% per annum in April. Inflation was expected to rise to 3.8 percent. Core inflation that excludes volatile items and holiday travel also came in at 4.0%, but it came down from 4.1% in April. Annual trimmed mean inflation accelerated to 4.4% from 4.1% in April. The most significant contributors to the annual increase were housing, food and non-alcoholic beverages, transport and alcohol and tobacco prices.