During today's Asian trading, the US dollar rose slightly against major currencies, partially offsetting yesterday's drop. At the same time, investors are being cautious ahead of the publication of US data, which may clarify further actions by the Fed. According to the CME FedWatch Tool, markets see a 6.8% probability of a 25 basis point rate cut at the Fed meeting in May, and a 68.8% probability of a rate cut in June (compared to 71.7% yesterday).
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 0.08% to 102.88. Yesterday, the index fell by 0.19%. As for the data, the producer price index, statistics on initial jobless claims, as well as a retail sales report will be published today at 12:30 GMT. Retail sales fell by 0.8% in January, while personal spending adjusted for inflation decreased by 0.1%. Despite the fact that spending growth is expected to slow down this year, experts believe that the January slowdown somewhat exaggerates the short-term decline in consumption. Households continue to benefit from the tailwind of real incomes, which should support spending in the near future. Experts expect to see a recovery in spending in February and forecast retail sales growth of 0.8%. Some growth in retail sales will be provided by cars. Previously published car sales data suggest a recovery in sales after a decline in January, which should lead to a decent increase in the overall figure. Excluding car sales, retail sales are expected to have grown by a more modest but still high 0.5%. Sales at other retailers are likely to be unstable. Market participants will also be watching sales in the food service industry - the only retail category in the services sector. This component has increased for 11 months in a row and indicates a noticeable compensation for wider consumption. Overall, retail data is expected to show that consumers are still spending money.
The yen fell 0.1% against the US dollar, while uncertainty remains regarding the results of the March meeting of the Bank of Japan. Sources said the Central bank would discuss ending negative rates next week if the big firms' wage negotiations bring convincing results. The preliminary results of the spring wage negotiations are due to be published on Friday, and news has already begun to appear that several of the country's largest companies have agreed to fully meet the demands of trade unions for higher wages. Meanwhile, experts warned that if the Bank of Japan leaves rates unchanged next week, the USD/JPY could jump to the 150 level from 147.90 currently.