Asian session review: the US dollar is showing negative dynamics

During today's Asian trading, the US dollar declined against major currencies, reaching its lowest level since September 6, due to expectations of aggressive easing of the Fed's monetary policy at the September meeting.

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) fell by 0.28% to 100.83. Recent statements from Fed officials and various economic data have caused market participants to revise their expectations for the size of the Fed's rate cut this week. According to the CME FedWatch Tool, markets see a 61% probability of a 0.5% rate cut in September (up from 30% the week before), and a 39% probability of a 0.25% rate cut (down from 70% the week before).

The yen rose 0.7% against the US dollar, again updating the current year's high. The fall of USD/JPY was caused by the widespread weakness of the US currency, as well as reduced trading activity.  Trading in Asia was slow, with markets in Japan, China and South Korea closed for holidays. Investors are also preparing for the meeting of the Bank of Japan, the results of which will be announced on Friday. Consensus estimates suggest that the interest rate will remain at the same level. But members of the board of the Bank of Japan said they were interested in further rate hikes. There should also be changes in political leadership in Japan, as the ruling Liberal Democratic Party intends to hold elections on September 27 to choose a leader to replace Prime Minister Fumio Kishida. Sanae Takaichi, one of the main contenders to replace Kishida, said that the Bank of Japan should refrain from further raising interest rates in order to preserve the country's economic recovery.