The Dollar Takes a Breather While Yen Slips
Focus on U.S. Economic Data
London, UK (Reuters) –
Investors are turning their attention to U.S. inflation data this week, causing the dollar to pause in its recent movements. At the same time, the yen is nearing 34-year lows, prompting speculation about potential interventions in Tokyo to stabilize the currency.
Mixed Bag of Economic Data Impacting Dollar
Recent U.S. economic reports have been a mixed bag, with services growth slowing down, followed by unexpectedly strong hiring numbers. This led to market uncertainty regarding the possibility of Federal Reserve rate cuts this year, causing fluctuations in the dollar’s value against major peers.
The dollar index, which measures the greenback against six major currencies, remained relatively flat at 104.35 on Monday. Meanwhile, U.S. Treasury yields, reflecting interest rate expectations, saw a slight increase.
Upcoming Events to Watch
The U.S. consumer price inflation data for March, scheduled for Wednesday, will be a significant factor affecting the dollar’s strength. Additionally, the European Central Bank’s policy meeting on Thursday will be closely monitored for its impact on major global currencies.
Analysts at MUFG warned that recent developments could lead to the Federal Reserve falling behind other central banks in rate cuts, potentially boosting the U.S. dollar. An unexpected increase in inflation could trigger a reassessment of rate cut expectations and push the dollar higher.
Yen Weakens, Potential Market Interventions
The dollar gained 0.17% against the yen, reaching 151.895, nearing its highest level since July 1990. Japanese Prime Minister Fumio Kishida indicated readiness for interventions to prevent excessive yen depreciation, suggesting Tokyo’s willingness to stabilize the currency.
Expert Opinions and Currency Market Insights
Takehiko Nakao, a former top currency official in Japan, emphasized the possibility of market interventions to prevent sudden yen devaluations. Nomura currency strategist Jin Moteki highlighted the limited upside potential for dollar-yen due to the risk of Japanese intervention.
Other Currency Movements
The euro dipped slightly to $1.083025, while sterling was trading at $1.26290. The ECB is expected to maintain rates this week, potentially hinting at a cut in June. In the cryptocurrency market, bitcoin saw a 4% increase, rising to $72,280.
Bank of Japan’s Monetary Policy
Bank of Japan Governor Kazuo Ueda addressed parliament but provided little insight into monetary policy. He mentioned the adoption of a simplified policy framework but did not disclose any new measures.
Overall, the currency markets remain volatile, with key economic indicators and central bank meetings shaping future trends.
