Asian session review: the US dollar stabilized against major currencies

During today's Asian trading, the US dollar consolidated against major currencies, as market participants took a wait-and-see attitude ahead of the publication of US economic data that will help clarify the prospects for the Fed's 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) fell by 0.01% to 104.44. As for the data, PMI indices for July will be released later today, GDP report for the 2nd quarterwill be published tomorrow, and on Friday the Fed's preferred inflation indicator, the personal consumption expenditures price index for June, will be released. According to forecasts, the manufacturing PMI rose to 51.7 from 51.6 in June, and the services PMI fell to 54.4 from 55.3. Meanwhile, consensus estimates suggest that GDP growth accelerated to 2% QoQ in the 2nd quarter from 1.4% QoQ in the 1st quarter, and the core PCE price index rose again by 0.1% m/m. A stronger growth in these indicators may force investors to reconsider the likelihood of easing the Fed's monetary policy. According to the CME FedWatch Tool, markets see a 96.1% probability of a rate cut in September, and a 98.4% probability of monetary policy easing in November.

The yen rose 0.7% against the US dollar, reaching its highest level since May 16, as traders adjusted their positions ahead of the July meeting of the Bank of Japan. Experts said that the risk of a rate hike for Japan and recent rounds of suspected currency intervention have speculators rushing to close what had been profitable "carry" trades funded in yen.

The New Zealand dollar fell 0.5% against the US dollar, while the Australian dollar declined 0.3%. These commodity currencies were weighed down by falling prices for industrial metals such as iron ore and copper, which hit 3.5-month lows amid gloomy demand prospects in China and investor risk aversion.