During today's Asian trading, the US dollar consolidated against major currencies, remaining near its lowest level since December 12, as recent US economic data reinforced expectations for further Fed monetary easing this year.
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 106.77. Last week, the index fell by 1.23%, recording the largest decline since mid-January on the back of weak U.S. retail sales data and news about the delay in the implementation of Donald Trump's reciprocal tariffs. Geopolitics also remained in the spotlight amid reports that negotiations aimed at ending the Russian-Ukrainian conflict would begin in Saudi Arabia this week.
The yen rose 0.25% against the US dollar, helped by favorable Japanese data. According to the report, Japan's economy grew faster than expected in Q4, driven by improved business investment and a surprise uptick in consumption, reinforcing the case for further interest rate hikes by the Bank of Japan (BOJ). Preliminary data showed a 2.8% annualized GDP increase, surpassing the 1.0% growth forecast. However, analysts noted that the headline figure was boosted by falling imports, which improved net trade, and seasonal year-end bonuses. Meanwhile, GDP growth for the 3rd quarter was revised up to 1.7% from 1.2%. Japan’s nominal GDP reached 609.29 trillion yen ($4 trillion) in 2024, exceeding 600 trillion for the first time but keeping the country as the world’s fourth-largest economy behind Germany.
The Australian dollar rose 0.2% against the US dollar, while investors are preparing for the RBA's February meeting, the results of which will be announced tomorrow. Experts expect RBA policymakers to begin a policy easing cycle and cut the rate by 25 basis points to 4.10%. The RBA has kept the rate at 4.35% for more than a year. While RBA policymakers have maintained a hawkish stance on the inflation outlook for most of this long pause in rates, the latest inflation data is likely to give them a reason to finally move to ease monetary policy.