The dollar was trading at 147.15 yen, up 0.4%, while the euro sat at $1.0920 and the dollar index was flat at 103.18
The yen extended its slow decline against the dollar in trading thinned by a Japanese holiday on Monday, with market participants still uncertain about the odds of a deep Fed rate cut next month.
The pause follows a turbulent week that began with a massive selloff across currencies and stock markets, driven by concerns over the U.S. economy and the BoJ’s hawkishness.
Last week ended calmer, with Thursday’s stronger-than-expected U.S. jobs data leading markets to pare bets for Fed interest rate cuts this year.
Still, investors remain unconvinced the Federal Reserve can afford to go slow with rate cuts, and their pricing of 100 bps of easing by year end, according to the CME Group’s FedWatch tool, corresponds to a recession scenario.
That leaves markets highly vulnerable to data and events, notably U.S. producer and consumer price figures due on Tuesday and Wednesday respectively this week, the global central bankers’ meeting at Jackson Hole next week and even earnings from AI company Nvidia later in the month.
It is more a case of market squaring up a little bit ahead of the U.S. inflation data, according to Christopher Wong, currency strategist at OCBC Bank in Singapore.
Mizuho analysts said investors should be mindful of other jobs and inflation data releases due between now and the September Fed meeting. Ahead of this week’s inflation data, “a coin toss probability reflects the finely balanced delicate situation”, they added.
The dollar was trading at 147.15 yen, up 0.4%. The euro sat at $1.0920 and the dollar index was flat at 103.18.
A week ago, the euro added as much as $1.1009 for the first time since January 2.
The Aussie was barely up at $0.6584 on Monday, while the New Zealand dollar stayed below last week’s three-week high of $0.6035. It was last at $0.6015.
The Reserve Bank of New Zealand reviews policy on Wednesday and is expected to keep its key cash rate unchanged at 5.50%.
