| Time | Country | Event | Period | Previous value | Forecast | Actual |
|---|
| 01:00 | Japan | BoJ Gov Ueda Speech | | | | |
During today's Asian trading, the US dollar consolidated against major currencies, as market participants decided to take a break after last week's rally. Investors are also being cautious ahead of a speech by a host of Fed policymakers who will help clarify the outlook for 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 106.67. Last week, the index jumped by 1.61% and reached its highest level since November 1, 2023. In general, experts predict further growth of the US currency amid expectations that Donald Trump will promote his tariff policy, and the US economy will continue to outperform its main competitors. Market participants are also waiting for news on who Trump will choose as treasury secretary, with Howard Lutnick, the CEO of Cantor Fitzgerald, and investor Scott Bessent top candidates for the job. Analysts suggest that higher tariffs, reduced immigration and debt-funded tax cuts will lead to higher inflation, which will limit the possibility of further Fed rate cuts. Currently, market participants estimate a rate cut of only 77 basis points by late 2025, compared with more than 100 a few weeks ago. However, these expectations may change, as at least seven Fed's officials are due to speak this week. Overall, the latest US economic data forced investors to further downgrade their expectations for a rate reduction in December.
The yen fell 0.3% against the US dollar amid uncertainty about the actions of the Central Bank of Japan in December. The head of the Bank of Japan, Kazuo Ueda, confirmed that the Central Bank will continue to gradually tighten monetary policy if the economy develops in accordance with forecasts. However, he did not mention whether a rate hike would occur in December, saying that the Bank of Japan would need to pay attention to various risks, including for the US economy. However, Ueda later added that the Central Bank would not wait for clarity on all risks before making a rate decision, and a postponement might eventually require a more aggressive rate hike. That left the market pricing in a 54% chance of a 0.25% hike at the December meeting, little changed from before the speech.