Dollar steady as inflation data boosts June rate cut bets; Yen in focus – Republic World

Dollar Steady: The dollar remained largely unchanged on Monday following data indicating easing US prices, which reinforced expectations of a potential interest rate cut by the Federal Reserve in June.

Meanwhile, the yen hovered around 152 per dollar, keeping traders wary of possible intervention.

The Commerce Department’s Bureau of Economic Analysis reported a 0.3 per cent rise in the Personal Consumption Expenditures (PCE) price index for February, slightly below economists’ forecasts.

However, consumer spending showed robust growth last month, highlighting the economy’s resilience.

Federal Reserve Chair Jerome Powell’s comments echoed the sentiment, stating that the inflation data aligned with the Fed’s objectives.

Market sentiments are now leaning towards a 68.5 per cent chance of a rate cut in June, up from 57 per cent the previous week, according to the CME FedWatch tool.

Additionally, traders are pricing in 75 basis points of cuts throughout the year.

The euro and sterling remained relatively stable against the dollar, while the dollar index, measuring the US currency against six counterparts, showed a slight increase.

The focus in the currency market remained on the yen, as it approached levels last seen in 1990, prompting concerns about potential intervention by Japanese authorities.

Despite touching a 34-year low against the dollar, the yen saw some recovery.

Japanese Finance Minister Shunichi Suzuki expressed willingness to take action against excessive currency movements, indicating the authorities’ vigilance.

Speculators held a net short yen position worth $10.64 billion, reflecting increased bets against the yen.

China’s yuan weakened against the dollar, despite positive economic data indicating a recovery and efforts by the central bank to stabilize the currency.

In other currency news, the Australian and New Zealand dollars saw minor fluctuations, while bitcoin and ether recorded modest gains in the cryptocurrency market.

(With Reuters Inputs)