Dollar steady as inflation data boosts June rate cut bets; yen in focus

Singapore, April 1 (BNA): The dollar was broadly steady on Monday as data showing easing US prices bolstered bets that the Federal Reserve could cut interest rates in June, while the yen loitered near 152 per dollar, keeping traders on edge on the threat of intervention.

The personal consumption expenditures (PCE) price index rose 0.3% in February, the Commerce Department’s Bureau of Economic Analysis said on Friday, compared with the 0.4% rise that economists polled by Reuters had forecast, Reuters reported.

The report also showed consumer spending rising by the most in just over a year last month, underscoring the economy’s resilience. Most markets across the globe were closed on Friday, with European markets closed on Monday as well.

Markets are now pricing in a 68.5% chance of the Fed cutting rates in June versus 57% chance at the end of last week, the CME FedWatch tool showed. Traders are also pricing in 75 basis points of cuts this year.

The euro was 0.03% lower at $1.0787, hovering near its more-than-one-month low of $1.0769 touched last week. Sterling was last at $1.2637, up 0.12% on the day.

The dollar index, which measures the US currency against six rivals, was 0.057% higher at 104.54, close to the six-week high of 104.73 it touched last week.

The spotlight in the currency market has been on the yen as its move toward levels last seen in 1990 revives the threat of intervention by Japanese authorities.

The yen touched a 34-year low against the dollar of 151.975 on Wednesday and was last at 151.395 per dollar on Monday.

Latest weekly data from the US markets regulator showed speculators hold a net short yen position worth $10.64 billion, ramping their bets back to the two-year high of $11 billion they held at the beginning of March.

China’s yuan weakened on Monday, pressured by the dollar, even as the latest Chinese data signaled the economy’s recovery is gaining traction and the central bank’s sustained efforts to stabilize the currency.

In the spot market, the yuan opened at 7.2227 per dollar and was last changing hands at 7.2292. The offshore yuan was trading at 7.2508 per dollar.

In other currencies, the Australian dollar was 0.08% higher at $0.6521, while the New Zealand dollar was little changed at $0.59805.

In cryptocurrencies, bitcoin rose 1% to $70,425.88. Ether was 3% higher at $3,600.

FG