Ekonomické zprávy

Asian session review: the US dollar is showing positive dynamics

TimeCountryEventPeriodPrevious valueForecastActual
00:30AustraliaCPI, y/yFebruary3.4%3.5%3.4%

During today's Asian trading, the US dollar rose slightly against major currencies, continuing yesterday's increase, while investors are preparing for the publication of important US data that may provide more clarity on the likely timing of the Fed's interest rate cut.

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 0.10% to 104.34. As for the data, on Thursday investors will receive weekly data on applications for unemployment benefits, the final estimate of US GDP for the 4th quarter of 2023, as well as statistics on pending home sales for February. However, the key event of the week will be the publication of the February report on personal income and spending of Americans on Friday, when the markets of Europe and the United States will be closed due Good Friday. The report contains the Fed's preferred inflation indicator, the core personal consumption expenditure price index (PCE). The core PCE is expected to have risen 0.3% in February after increasing 0.4% in January. On an annual basis, the core PCE is projected to have grown by 2.8%, as in January. Higher-than-expected indicators may strengthen the likelihood that the Fed will keep interest rates at the current level for a longer time. According to the CME FedWatch Tool, markets see an 11.7% probability of a 25 basis point rate cut at the Fed meeting in May, and a 68.5% probability of a rate cut in June (compared to 74.9% a week earlier), with about 80 basis points of cuts priced in for this year - much lower than the 160 or so that had been priced in at the start of the year.

The yen fell 0.1% against the US dollar, approaching a 34-year low and entering the zone that triggered official market intervention a year-and-a-half ago. Amid further depreciation of the national currency, Japan's finance minister Shunichi Suzuki issued his strongest warning to date on Wednesday, saying authorities could take "decisive steps", language previously used before intervention. Meanwhile, the governor of the Bank of Japan, Kazuo Ueda, also said that the Central Bank will also closely monitor currency movements and their impact on economic and price changes. He added that at the moment it is important to support the economy through an adaptive monetary policy. "Japan's medium- to long-term inflation expectations, and trend inflation, are still in the process of heading towards 2%," Ueda said.

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