Asian session review: the US dollar is showing negative dynamics

During today's Asian trading, the US dollar declined slightly against major currencies as investors adjust their positions ahead of the publication of US data that will help clarify the timing of the Fed's monetary policy easing.

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 0.12% to 103.70. Later today (at 13:30 GMT), data on durable goods orders for January will be published, and on Thursday, the January personal consumption expenditures price index (the Fed's preferred inflation indicator) will be presented. Economists expect core PCE to rise by 0.4% compared to December and by 2.8% per annum. Together with core PCE, a report on personal income and spending will also be presented. Consensus estimates suggest that personal income increased by 0.4% in January after an increase of 0.3% in December, and personal spending rose by 0.2% after an increase of 0.7%. The market has recently lowered expectations about the size and how soon the Fed will cut rates as the U.S. economy remains strong. Statements by Fed officials also signaled that the U.S. central bank is in no hurry to cut rates. According to the CME FedWatch Tool, markets see a 18.7% probability of a 25 basis point rate cut at the Fed meeting in May, and a 59.0% probability of a rate cut in June, with approximately 80 basis points of cuts priced in for this year.

The yen rose 0.25% against the US dollar, helped by Japan's inflation data, which reinforced expectations that the Bank of Japan is still on track to exit negative rates as soon as next month. The Ministry of Internal Affairs and Communications said that CPI growth slowed to 2.2% per annum in January from 2.6% per annum in December. Economists had expected an increase of 2.1% per annum. Core CPI, which excludes the volatile costs of food, increased by 2% per annum. That exceeded expectations for an increase of 1.9% and was down from 2.3% in the previous month.