Asian session review: the US dollar has stabilized against major currencies

During today's Asian trading, the US dollar consolidated against major currencies, remaining near the 7-month low reached yesterday amid expectations of easing of the Fed's monetary policy at the September meeting.

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 0.05% to 101.94. Yesterday, the index fell by 0.58%, reaching its lowest level since January 2. 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. Investors mostly expect Powell to recognize the need for a rate cut, and will analyze his words to get clues about whether the Fed will begin the process of easing monetary policy with a rate cut of 25 basis points or 50 basis points. Experts warn that any clear risks of a more significant rate cut could signal a policy mistake by the Fed and higher risks of recession. According to the CME FedWatch Tool, markets see a 24.5% probability of a 0.5% rate cut in September (down from 53% the week before), and a 75.5% probability of a 0.25% rate cut (up from 47% the week before). Traders are pricing in a total of 93 bps of cuts this year.

The yen fell 0.3% against the US dollar, but remains near the almost 2-week high. The key event of the week for the yen will be the speech of the head of the Bank of Japan Kazuo Uede, which will take place on Friday. Economists expect Ueda to discuss the Central Bank's latest decision to raise interest rates, while the focus will be on whether he sticks to his recent hawkish tone. Meanwhile, experts said that the pace of strengthening of the yen is likely to be more gradual, as data show that most speculative short positions have been cleared.