Dollar pauses as investors eye U.S. inflation data

by Jonathan Adams

The dollar index was broadly flat on Monday at 104.38, while U.S. Treasury yields, which reflect interest rate move expectations, pushed higher

The dollar paused on Monday as investors eyed U.S. inflation data later this week, while the yen slid close to 34-year lows as traders remained on alert for any potential action in Tokyo to support the weakening currency.

The dollar wavered last week as traders digested mixed U.S. economic data, with a slowdown in services growth followed by unexpectedly strong hiring numbers that prompted the market to lower bets on Fed interest rate cuts this year.

The dollar index – which tracks the greenback against six major rivals – was broadly flat on Monday at 104.38, while U.S. Treasury yields, which reflect interest rate move expectations, pushed higher.

U.S. consumer price inflation for March on Wednesday will be the next big test for dollar strength, while the ECB policy meeting on Thursday is the other main economic marker for big global currencies this week.

The latest developments have raised the risk that the Federal Reserve could lag behind other major central banks when reducing interest rates, MUFG currency analysts stated in a note.

Another upside inflation surprise could spark a bigger hawkish reassessment of Fed rate cut expectations and open the door for the U.S. dollar to break higher, the note added.

The dollar firmed 0.16% against the yen on the day to 151.88, putting it within a whisker of its highest since July 1990.

Japanese PM Fumio Kishida said on Friday authorities will use “all available means” to deal with excessive yen declines, stressing Tokyo’s preparedness to intervene in the market to prop up the currency.

BoJ Governor Kazuo Ueda addressed the country’s parliament on Monday, but gave little away on monetary policy and said he had succeeded in adopting a simpler policy framework.

Disclaimer: The opinions expressed by our writers are their own and do not represent the views of Trading and Investment News. The information provided on Trading and Investment News is intended for informational purposes only. Trading and Investment News is not liable for any financial losses incurred. Conduct your own research by contacting financial experts before making any investment decisions.

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