Asian session review: the US dollar is showing positive dynamics

During today's Asian trading, the US dollar rose moderately against major currencies, but still remains near the 3-year low reached on Friday.

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 0.28% to 99.56. Since the beginning of April, the index has fallen by 4.45%, as the U.S. has threatened, imposed and then massive tariffs were imposed, undermining confidence in U.S. economic growth and stability. Yesterday, Fed Chairman Jerome Powell expressed concern that the central bank could face a dilemma between controlling inflation and supporting economic growth. With uncertainty growing about the impact of President Donald Trump's tariffs, Powell said that while he expects higher inflation and lower growth, it's unclear what the Fed will need to focus more on. The Fed is tasked with ensuring stable prices and full employment, and economists, including those who work at the Fed, see threats to both objectives from these duties. Tariffs essentially act as a tax on imports, although their direct relationship to inflation has historically been patchy. Powell gave no indication of where he thinks interest rates are heading, but noted that "at this point, we are in a good position to wait for more clarity before considering any adjustments to our policy position." Markets expect the Fed to start cutting rates again in June and make three or four 0.25% cuts by the end of 2025, according to CME FedWatch. Powell noted that short-term inflation indicators based on surveys and market indicators are rising, although the long-term outlook remains close to the Fed's 2% target. The Fed's key inflation rate is expected to be 2.6% in March, he said.

The yen fell 0.6% against the US dollar, retreating from a seven-month high amid news regarding trade talks between the US and Japan. Japan's economy minister Ryosei Akazawa said foreign exchange had not been discussed at the trade talks in Washington. The yen rose ahead of the talks on expectations that the countries could agree to strengthen the yen against the dollar. But with long yen positions at their highest level since 1986, gains could be unwound if no deal is struck.

The Australian dollar declined by 0.55% against the US dollar, while investors assessed the Australian data, which indicated that a labor market that remains healthy but does not stand in the way of policy easing. According to the report, the number of employees increased by 32.2 thousand in March after a decrease of 57.4 thousand in February (revised from -52.8 thousand). Economists had expected an increase of 40 thousand. The unemployment rate rose to 4.1% from 4.0% in February (revised from 4.1%). Consensus estimates suggested an increase to 4.2%. The RBA had not expected further loosening in the labour market, tipping unemployment to peak at 4.2% this cycle. Swaps imply a 0,25% rate cut from the RBA has been fully priced in for May, with some risk - about 25% - of a larger 0,5% move as U.S. tariffs fuelled fears of a global recession.