Asian session review: the US dollar is showing positive dynamics

During today's Asian trading, the US dollar rose moderately against major currencies, reaching its highest level since February 22, while investors are preparing for the publication of US inflation data, which may affect 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) rose by 0.23% to 104.07. As for the data, the personal consumption expenditures price index (the Fed's preferred inflation indicator) will be published tomorrow. Economists expect core PCE to grow by 0.4% compared to December and by 2.8% per annum in January. Together with core PCE, a report on personal income and spending will also be presented. Markets have largely priced out a rate cut at both the Fed's March and May meeting, According to the CME FedWatch Tool, markets see a 15.4% probability of a 25 basis point rate cut at the Fed meeting in May, and a 62.2% probability of a rate cut in June, with approximately 80 basis points of cuts priced in for this year.

The New Zealand dollar fell by 0.98% against the US dollar after the Central Bank of New Zealand left the interest rate at 5.5%, as expected, but trimmed its forecast cash rate peak to 5.6% from 5.7%. RBNZ also said that the risks to the inflation outlook have become more balanced.

The Australian dollar fell 0.5% against the US dollar on the back of weak Australian inflation data, which reduced the need for further tightening of monetary policy. The Australian Bureau of Statistics said the CPI rose 3.4% per annum in January after a similar increase in December. The current inflation was the lowest since November 2021. Economists had expected inflation to accelerate to 3.6% per annum. Excluding volatile items, inflation softened to 4.1% per annum from 4.2% per annum in December.