Asian session review: the US dollar has stabilized against major currencies

During today's Asian trading, the US dollar consolidated against major currencies amid a lack of new catalysts and investor caution ahead of the publication of US inflation data.

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 0.05% to 106.11. As for the data, the November US CPI report will be presented on Wednesday, and the producer price index for November will be released on Thursday. Overall, progress in the fight against inflation has begun to slow down. Consumer prices rose by 0.2% in October, which led to an increase in the annual rate to 2.6%. Excluding food and energy, the core CPI rose 0.3% for the third month in a row, with three-month year-on-year growth of 3.6%, higher than the 12-month figure of 3.3%. Indeed, the inflation situation has improved over the past year, and some key sources of inflationary pressures, such as an overheated labor market, continue to weaken. However, the disinflationary momentum is weakening, and new obstacles have emerged (for example, potential tariffs and tax breaks), which make the last stage of returning inflation to the Fed's 2% target look increasingly difficult. The CPI report for November is unlikely to change the stable inflation picture that has developed over the past few months. Experts expect that the overall CPI increased by about 0.25% over the month and by 2.7% year-on-year. Gasoline prices rose in November and food inflation also seems to have increased. Excluding these more volatile components, the core CPI is likely to have increased by about 0.25% m/m, which will keep the 12-month change in a narrow range of 3.2%-3.3% for the sixth consecutive month. Experts said that a hot U.S. CPI print may not necessarily derail a cut at next week's FOMC meeting, but it would affect the level of implied cuts priced for FOMC meetings from March 2025 onwards. According to the CME FedWatch Tool, markets see a 87.1% probability of a 0.25% rate cut in December (compared to 61.6% a week ago), while the probability of an additional rate cut in January is 26.1%.

The Australian dollar rose 0.7% against the US dollar, rebounding from its lowest level since August 5, as investors adjust positions ahead of tomorrow's meeting of the Reserve Bank of Australia (RBA). The RBA is the only central bank among its peers that has not yet begun cutting rates, and it isn't expected to do so in December either, although it might soften its tone on growth targets. China's closed-door Central Economic Work Conference will also be in focus, however, economists do not expect any serious stimulus proposals until it becomes clearer what Donald Trump plans to do with trade tariffs after taking office in January.