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

During today's Asian trading, the US dollar consolidated against major currencies, but was on track for the first weekly increase in the last 4 weeks amid revised expectations of monetary easing by the Fed.

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 0.04% to 103.40. Since the beginning of the week, the index has increased by 0.7%, as the latest US data (retail sales producer prices and the number of initial applications for unemployment benefits) reinforced the view that the Fed will not rush to lower interest rates, even though some areas of the economy are showing signs of weakness. These three reports, which are the last series of important publications before the March Fed meeting, confirmed the validity of the mood of US Central Bank policymakers and slightly weakened expectations that the decision on the first interest rate cut will be approved in June. Although the market does not expect any changes in interest rates in March, investors will closely monitor the Fed's interest rate forecast and comments from Central Bank Chairman Powell. According to the CME FedWatch Tool, markets see a 9.7% probability of a 25 basis point rate cut at the Fed meeting in May, and a 59.9% probability of a rate cut in June (compared to 73.3% last Friday).

The yen fell 0.15% against the US dollar, while market participants are cautious ahead of the March meeting of the Bank of Japan, at which it may abandon its policy of negative interest rates if Japanese companies offer sharp wage increases, as expected. Meanwhile, sources said that the Bank of Japan is close to ending an eight-year policy of negative interest rates, and internal preparations for such a step have been underway since Kazuo Ueda took over as head of the Bank of Japan last year. BofA experts believe that the specific timing of the Bank of Japan's policy change (March or April) is less important than the bank's explicit intention to adjust its policy in the near future.