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The dollar found stability on Monday, with most major Asian markets closed for a holiday, delaying the start of what could evolve into a bustling week. Attention now shifts to US inflation data for clues on the Federal Reserve’s potential interest rate cuts.
Euro Edges Lower, Eyes on Euro Zone Growth Data
The euro experienced a slight decline to $1.0778, stepping back from its ten-day high achieved in early trading. Last week’s modest recovery followed a steady decline since the beginning of 2024. Eyes are now on the euro zone’s fourth-quarter economic growth data, due to be released on Wednesday, which may set a new trajectory.
Pound Steady at $1.2632
The British pound held steady at $1.2632 against the dollar.
Yen Makes Modest Gains Ahead of US CPI Data
The yen saw a slight uptick to 149.04 against the dollar, maintaining cautious movements ahead of the release of US January consumer price index (CPI) data on Tuesday.
Anticipation Builds for US CPI Figures
Expectations are high for the US core consumer price index to record a 0.3 percent increase on a monthly basis in January, though it is projected to remain elevated on an annual basis at 3.8 percent. Strong employment data earlier this month dampened hopes for a Federal Reserve rate cut in March, with May now favored for potential action.
UK CPI Data and Bank of England Rate Cut Prospects
Wednesday’s UK CPI data is poised to influence expectations for when the Bank of England may initiate interest rate cuts.
Market Focus on Japanese Yen
The Japanese yen, highly sensitive to interest rate movements, saw a significant rise late last year amid expectations of imminent US rate cuts. However, sentiment has since shifted with expectations of postponed rate cuts.
