Asian session review: the US dollar stabilized against major currencies

During today's Asian trading, the US dollar consolidated against major currencies, remaining near its lowest level since July 31, as investors were cautious ahead of the publication of US inflation data that will help assess the prospects for easing the Fed's monetary policy.

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 0.04% to 101.80. Since the beginning of the week, the index has fallen by 0.7%. As for the data, today at 13:30 GMT, a report on personal income and expenses for November will be presented, which includes the Fed's preferred inflation indicator - the core personal consumption expenditure price index (PCE). Economists predict that the growth of the core PCE, which excludes food and energy, slowed to 3.3% per annum from 3.5% per annum in October, which will confirm the arguments in favor of easing the Fed's policy. According to the CME FedWatch Tool, markets see a 71.3% probability of a 25 basis point rate cut at the Fed meeting in March 2024 and a 100% probability of a rate cut in May 2024.

The yen declined 0.15% against the US dollar after rising 1.02% yesterday. The yen was slightly influenced by Japanese data, which showed that core CPI (excluding fresh food) rose by 2.5% per annum in November, slower than the 2.9% rise in October. It was the weakest growth in more than a year. Despite the slowdown, core inflation remained above the central bank's 2% target. Meanwhile, the minutes of the October meeting of the Bank of Japan showed that members discussed how to communicate the modification to the yield curve control policy. One member said it is necessary to avoid encouraging speculative transactions by giving the impression that the BoJ was forced to make policy decisions to follow fluctuations in market rates.