Asian session review: the US dollar traded steadily against major currencies

During today's Asian trading, the US dollar consolidated against major currencies, as the latest US inflation data had almost no effect on expectations of easing 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 102.95. Yesterday, the index rose by only 0.06%, while data showed that the consumer prices index rose by 0.4% m/m in February, as expected. On an annualized basis, the CPI increased by 3.2%, slightly exceeding forecasts (+3.1%). Excluding unstable food and energy components, the core CPI increased by 0.4% on a monthly basis (forecast: +0.3%) and by 3.8% per annum (forecast: +3.7%). According to the CME FedWatch Tool, markets see a 14.5% probability of a 25 basis point rate cut at the Fed meeting in May, and a 66.3% probability of a rate cut in June (compared to 71.7% yesterday). Attention now turns to U.S. retail sales, an indication of consumer spending that has been resilient so far, and producer prices due out later this week.

The yen stabilized against the US dollar after falling 0.5% yesterday (the sharpest decline in a month) amid a more gloomy assessment of the country's economy by the head of the Bank of Japan Kazuo Ueda. Traders are now awaiting initial estimates of the spring wage negotiations, which will be announced on Friday and will be crucial for Central Bank policymakers when deciding whether to abandon negative interest rates at the March meeting. The country's largest trade union confederation has demanded pay rises of 5.85% this year, surpassing 5% for the first time in 30 years.