During today's Asian trading, the US dollar declined slightly against major currencies, but remains near an almost eight-week high, while market participants are preparing for the publication of a new batch of US economic data that may affect the prospects for the Fed's monetary policy. The first US presidential debate will also take place this week.
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 0.06% to 105.74. Last week, the index rose by 0.23%. As for the data, the key event of this week will be the publication of the U.S. personal consumption expenditures (PCE) price index (on Friday). Economists predict that the PCE remained unchanged in May compared to April, while core PCE growth slowed to 0.1% from 0.2%. A soft reading is likely to bolster bets on a rate cut as early as September. According to the CME FedWatch Tool, markets see a 10.3% probability of a 25 basis point rate cut at the Fed meeting in July, a 65.9% probability of a rate cut in September, and a 78.2% probability of monetary policy easing in November.
The yen consolidated against the US dollar, remaining near the 160 level (a 34-year low), which increases the risk of another intervention. Today, Japan's chief currency diplomat Masato Kanda said that the authorities will take appropriate steps in case of excessive movement of foreign currency. Meanwhile, a summary of opinions at the Bank of Japan's June policy meeting showed some policymakers called for raising interest rates in a timely fashion as they saw a risk of inflation overshooting expectations.