During today's Asian trading, the US dollar fell significantly against major currencies, reaching its lowest level since January 5, while investors are preparing for the publication of the minutes of the last Fed meeting and a speech by Central Bank Chairman Powell.
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 0.36% to 102.09. Last week, the index fell by 0.71%, and recorded the fourth consecutive weekly decline. The next catalyst for the dollar may be the minutes of the July Fed meeting, which will be presented on Wednesday. Investors' attention will also be focused on comments by Fed Chair Jerome Powell at the central bank's Jackson Hole Economic Policy Symposium on Aug. 22-24. Overall, investors bet on a dovish tone emerging in the Fed meeting minutes, and also expect Powell to continue pushing for an interest rate cut in September. According to the CME FedWatch Tool, markets see a 28.5% probability of a 0.5% rate cut in September (down from 50% the week before), and a 71.5% probability of a 0.25% rate cut (up from 50.0% the week before).
The yen rose 1.3% against the US dollar, reaching its highest level since August 7, which was caused by the widespread weakening of the US currency and the potential for further divergence in monetary policy between the Fed and the Bank of Japan. Investors are also preparing for Friday's speech by Bank of Japan Governor Kazuo Ueda, where he is expected to discuss the Central Bank's latest decision to raise interest rates. In addition, Japan's national consumer price index for July will be presented this week (Thursday, 23:30 GMT). Consensus estimates suggest that the overall CPI rose by 2.9% per annum after an increase of 2.8% per annum in June, and the growth of the core CPI accelerated to 2.7% per annum from 2.6% per annum.