During today's Asian trading, the US dollar consolidated against major currencies, while investors took a wait-and-see attitude ahead of the publication of US inflation data, which may affect the size of the Fed's interest rate cut in September.
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 0.03% to 103.17. As for the US data, the producer price index for July will be published tomorrow, and on Wednesday the consumer price index for July will be released. Economists look for rises of 0.2% in both the headline and core CPI, with the annual core CPI slowing a tick to 3.2%. Such a result is likely to increase the likelihood of the Fed easing monetary policy in September, but a core run-rate still above target should also speak against a larger 0.5% cut or an intra-meeting cut. According to the CME FedWatch Tool, markets see a 46.5% probability of a 0.5% rate cut in September (down from 85% a week earlier), and a 48.0% probability of 0.25% rate cut in November (up from 45% a week earlier).
The yen fell 0.4% against the US dollar in trading thinned by a Japanese holiday. Meanwhile, the latest U.S. Commodity Futures Trading Commission data showed that leveraged funds' position on the Japanese yen shrank to the smallest net short position since February 2023 in the latest week. J.P. Morgan analysts revised their USD/JPY forecast to 144 by the second quarter of 2025 and said they see the yen consolidating in the coming months.