Asian session review: the US dollar is showing positive dynamics

During today's Asian trading, the US dollar rose slightly against major currencies, returning to its highest level since May 1, while market participants expect the publication of US inflation data, which may affect the timing of the Fed's monetary policy easing. The focus was also on the US election debates, which increased Donald Trump's chances of becoming president.

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 106.01. As for the data, the personal consumption expenditures (PCE) price index will be presented today at 12:30 GMT. Consensus estimates suggest 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 64.1% probability of a rate cut in September, and a 75.8% probability of monetary policy easing in November.

The yen continued its decline against the US dollar, breaking the 161 mark and reaching its lowest level since 1986, as traders tentatively tested Japan's resolve to defend its currency. Meanwhile, Japanese officials reiterated their warnings. "Excessive volatility in the currency market is unacceptable," Finance Minister Suzuki said, adding that authorities will "respond appropriately" to such moves. In addition, Japan appointed a new top foreign exchange diplomat: Atsushi Mimura, a financial regulation veteran, will replace Masato Kanda.