Asian session review: the US dollar is showing negative dynamics

During today's Asian trading, the US dollar declined significantly against major currencies, reaching its lowest level since June 25, which was caused by the strengthening of the euro and the increased likelihood of easing the Fed's monetary policy later this year.

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 0.39% to 105.45. On Friday, the index also declined as fresh inflation data caused a reassessment of the Fed's monetary policy prospects. The personal consumption expenditures (PCE) price index, excluding the volatile categories of food and energy, which is the Fed's preferred inflation gauge, inched up 0.1 per cent m-o-m in May, following an upwardly revised 0.3 per cent m-o-m increase (from +0.2 per cent m-o-m) in April. This marked the weakest monthly advance in the core PCE price since November 2023. Economists had predicted the indicator would edge up 0.1 per cent m-o-m. In the 12 months through May, the core PCE price index surged 2.6 per cent, decelerating from an unrevised 2.8 per cent in the 12 months through April. This was the smallest reading since March 2021. Economists had expected a soar of 2.6 per cent y-o-y. According to the CME FedWatch Tool, markets see a 10.9% probability of a 25 basis point rate cut at the Fed meeting in July, a 63.4% probability of a rate cut in September, and a 76.2% probability of monetary policy easing in November.

The euro rose 0.5% against the US dollar on the back of the results of the first round of France's snap election. Marine Le Pen's far-right National Rally (RN) party won, exit polls showed, although analysts noted the party won a smaller share of the vote than some polls had initially projected.

The pound rose 0.3% against the US dollar, supported by UK data. The Nationwide Building Society said that housing prices rose by 0.2% in June, slowing compared to May (+0.4%). Economists had expected prices to remain unchanged. In annual terms, house prices rose by 1.5% after an increase of 1.3% in May. This was the fifth increase in a row. Consensus estimates also suggested an increase of 1.5%. As a result, the average price of a typical home (not seasonally adjusted) was 266,604 pounds compared to 264,249 pounds in May. Nationwide said that house prices are now around 3% below the all-time highs recorded in the summer of 2022, after taking account of seasonal effects.