Asian session review: the US dollar is showing a weak increase

During today's Asian trading, the US dollar rose slightly against major currencies, while market participants expect new catalysts that can cause significant movements.

The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) rose by 0.08% to 104.37. This week, investors will pay attention to the minutes of the January Fed meeting, as well as speeches by a number of Fed policymakers. The minutes of the Fed meeting, which will be presented on Wednesday, will provide more information about the prospects for Fed policy, while any hawkish position is likely to resume fluctuations in rates expectations. According to the CME FedWatch Tool, markets see a 36.6% probability of a 25 basis point rate cut at the Fed meeting in May, and a 77.9% probability of a rate cut in June, with approximately 90 basis points of cuts priced in for this year.

The yen fell 0.15% against the US dollar, having already surpassed the key 150 yen level for six straight sessions and prompting warnings from Japanese officials in a bid to stabilize the currency. The yen's weakness is related to expectations that the Fed will keep interest rates at the current level for longer, which contrasts with the recession in Japan and market doubts about the tightening of monetary policy by the Bank of Japan in the near future.

The Australian dollar fell 0.1% against the US dollar, as the minutes of the last RBA meeting signaled that policymakers need more time to be confident of reducing inflation before they can rule out another interest rate hike.

The Chinese yuan consolidated against the US dollar, despite the fact that the Central Bank of China lowered the longer-term benchmark lending rate at a slightly sharper than expected pace. The PBoC cut its five-year loan prime rate (LPR) to 3.95% from 4.20%. The bank was expected to lower the rate to 4.1%. The one-year LPR was left unchanged at 3.45%. Meanwhile, experts said that despite efforts to stimulate demand for loans and revive the real estate market, additional political support is needed to strengthen fragile confidence.