US Dollar stabilizes amid inflation on expectations, interest rate cuts

The dollar stabilized on Monday after data last week showed that inflation in the United States remains difficult, casting doubt on when the Federal Reserve (the US central bank) will begin its monetary easing cycle, while the yen remained weak near the important psychological level is at 150 to the dollar.

US markets are closed today, Monday, for the Presidents’ Day holiday, and trading volumes are likely to be low during the day.

According to Reuters, the yen price has been hovering around the 150 level in the past few days, which prompted officials to comment on the currency’s movements and kept the markets on alert for possible intervention by the Japanese authorities to stabilize the currency.

The yen rose during the day by 0.20 percent to 149.94 to the dollar, but it is still down about 6 percent for the year, while the yen against the euro hovers around its lowest levels in three months at 161.925.

The dollar index, which measures the performance of the US currency against six major currencies, began the week with little change at 104.20 after recording five consecutive weeks of gains. The index rose three percent this year, as traders adjusted their expectations for lower interest rates.

Data last week showed that producer and consumer prices in the United States rose more than expected in January, with the apparent stability in inflation increasing the possibility of the Federal Reserve delaying interest rate cuts.

CME’s Fed Watch tool showed that traders are now betting that June will be the starting point for the easing cycle, compared to expectations at the beginning of the year that it would be in March.

Traders’ focus this week is on the minutes of last month’s Federal Reserve meeting, which is scheduled to be released on Wednesday. Several US central bank officials, including Christopher Waller and Rafael Bostic, are also scheduled to speak this week.

The euro traded at $1.0782, while the British pound reached $1.26205, up 0.16% during the day.

The Australian dollar rose 0.15 percent to $0.6542, while the New Zealand dollar advanced 0.24 percent to $0.6139 as Chinese markets returned from a long holiday with modest gains.

The Chinese yuan fell against the dollar on Monday, but losses were limited by signs of increased holiday spending.