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

TimeCountryEventPeriodPrevious valueForecastActual
01:30ChinaPPI y/yMay-3.6%-4.3%-4.6%
01:30ChinaCPI y/yMay0.1%0.3%0.2%

During today's Asian trading, the US dollar consolidated against major currencies after a significant drop yesterday, as US labor market data reinforced expectations that the Federal Reserve would pause its rate hike cycle.

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 0.03% to 103.37. Yesterday, the index fell by 0.74%, reaching its lowest level since May 23.

The Labor Department said yesterday that the initial jobless claims rose last week to the highest level since October 2021, indicating a slowdown in the labor market amid growing recession risks. According to the CME FedWatch Tool, markets estimate the probability that the Fed's interest rates will remain unchanged at the June meeting at 77.1%. Meanwhile, the probability of a 0.25% rate hike at the July Fed meeting is estimated at 52.5%. The next key event that may change these expectations will be the publication of the US consumer price index for May (on Tuesday, June 13). Economists had expected consumer price growth to slow to 0.3% from 0.4% in April.

The Chinese yuan fell by 0.15% against the US dollar, as China's inflation data reinforced investors' concerns about the country's fragile economic recovery. The National Bureau of Statistics (NBS) said that in May the consumer price index rose by 0.2% per annum after an increase by 0.1% in April (the weakest increase in 26 months). Economists had expected price growth to accelerate to 0.3%. On a monthly basis, consumer prices fell by 0.2% after falling by 0.1% in April. Consensus estimates suggested a decrease by 0.1%. NBS also said that producer prices fell by 4.6% per annum, recording the sharpest decline since February 2016 and exceeding economists' forecasts (-4.3%), as faltering demand weighed on manufacturing, impeding the fragile economic recovery. On a monthly basis, producer prices declined by 2.6%, following a 0.5% drop in April.

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