During today's Asian trading, the US dollar consolidated against major currencies amid a lack of new catalysts capable of causing large-scale movements. Market participants are waiting for further comments from Fed policymakers, which may clarify the trajectory of the Central Bank's 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 0.03% to 104.42. Last week, the index fell 0.8% as weaker-than-expected US CPI data led to markets pricing in 50 basis points of easing, or at least two rate cuts this year. However, subsequent statements by Fed policymakers have prompted traders to trim the amount of easing expected this year to about 46 basis points. This week, investors will continue to follow the comments of Fed policymakers, as well as pay attention to the minutes of the Fed's May meeting, which will be published on Wednesday. According to the CME FedWatch Tool, markets see a 9.1% probability of a 25 basis point rate cut at the Fed meeting in June, a 27.9% probability of a rate cut in July, and a 65.4% probability of monetary policy easing in September.
The euro rose 0.1% against the US dollar, returning to the 2-month high reached last week. Since the beginning of May, EUR/USD has increased by about 2%, which is the largest increase since November 2023. Despite the fact that markets are predicting a rate cut in Europe starting in June, recent data has provided some surprises. Last quarter, the German economy grew more than expected, and the index of investor sentiment reached a two-year high. Meanwhile, Friday's report showed that in April, consumer inflation in the eurozone amounted to 2.4% per annum, unchanged from March and confirming economists' forecasts. In addition, ECB Vice President Luis de Guindos said that eurozone policymakers have become more confident that inflation will return to target next year due to easing price pressures. Markets are currently pricing in 66 bps of easing from the European Central Bank this year.