Asian session review: the US dollar is showing positive dynamics

During today's Asian trading, the US dollar rose slightly against major currencies, while market participants are cautiously awaiting Fed Chairman Powell's speech, which could trigger a reassessment of the outlook for monetary policy.

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 0.09% to 103.92. Federal Reserve Chair Jerome Powell will testify before lawmakers on Wednesday and Thursday. Economists expect Powell to be patient again and emphasize that there is no need to rush to lower interest rates. However, if Powell signals more forceful pushbacks, that could lead to further hawkish re-pricing. According to the CME FedWatch Tool, markets see a 20.9% probability of a 25 basis point rate cut at the Fed meeting in May, and a 66.5% probability of a rate cut in June. An important event of this week will also be the publication of the nonfarm payrolls report for February. According to forecasts, the number of jobs rose by 200,000 after an increase of 353,000 in January, while the unemployment rate remained at 3.7% and wage growth slowed to 0.3% m/m from 0.6% m/m in January and to 4.4% y/y from 4.5% y/y.

The yen rose 0.1% against the US dollar, helped by Japan's inflation data, which increased the likelihood that the Central Bank will soon abandon negative interest rates. The Statistics Bureau of Japan stated that Tokyo CPI core (ex-fresh food) rose from 1.8% y/y to 2.5% y/y in February, matching expectations. CPI core-core (ex-food and energy) slowed from 3.3% y/y to 3.1% y/y. Headline CPI in the capital city rose from 1.8% y/y to 2.6% y/y. Many analysts expect the Bank of Japan to raise interest rates to zero at its April meeting if the spring wage negotiations in Japan lead to a significant increase in wages, which should stimulate consumer spending.