USD/JPY declined 0.7% to 155.94, not far from Thursday’s five-week low of 155.375
The U.S. dollar was steady in Europe Tuesday, while the yen surged in the wake of suspected intervention by the government last week.
At 09:40 GMT, the Dollar Index, which tracks the greenback against six other currencies, rose 0.1% to 104.067, jumping from last week’s four-month low.
The dollar steadied Tuesday, with traders appearing to take a breather as they digest the volatile political situation with little in the way of economic data until the release of U.S. PCE inflation figures for June on Friday.
Vice President Kamala Harris appears on course to be the Democratic Party’s presidential nominee, but will still need to be formally nominated.
Still, Republican nominee Donald Trump was seen polling ahead of Biden and Harris as of last week, according to CBS and HarrisX data.
Expectations of a Trump presidency has resulted in some strength in the dollar, as analysts said he would be likely to enact protectionist trade policies.
The main economic data release this week will arrive on Friday, with June’s PCE index set to test market expectations that the Fed is all but certain to reduce interest rates in September.
In Europe, EUR/USD declined 0.2% to 1.0873, edging down ahead of key activity data later in the week.
While economic growth in the eurozone remains sluggish, strength in the dominant services sector, boosted by tourism, has kept price pressures uncomfortably high.
This has posed a challenge to the European Central Bank, so purchase mangers’ index data on Wednesday will be closely watched after the central bank kept interest rates on hold at 3.75% last Thursday and resisted offering future guidance, saying it was “data-dependent.”
Markets are pricing in around two ECB rate cuts for the rest of the year.
GBP/USD was down 0.1% at 1.2919, falling back from the 1.30 level that the pair saw last week for the first time in a year.
The pound has received a boost from the political stability brought about by the Labour Party’s dominant electoral victory at the beginning of this month.
However, at the heart of pound’s gain is the belief that British interest rates will take longer to drop than those elsewhere.
Many big central banks have started reducing rates, with the BoE and the U.S. Fed among the last standing still.
Data earlier this month showed that UK inflation remains stubbornly high, pushing the likely starting date of the Bank of England’s rate-cutting cycle from August to later in the year.
In Asia, USD/JPY declined 0.7% to 155.94, not far from Thursday’s five-week low of 155.375, with the yen continuing to strengthen against the dollar after suspected intervention by the government last week.
