During today's Asian trading, the US dollar declined slightly against major currencies, but remains near its highest level since February 16.
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 0.12% to 104.31. The index rose by 0.96% last week as the strengthening of the US economy, high interest rates, as well as the unexpected move by the Swiss National Bank strengthened risk appetite and increased the global attractiveness of the dollar. Although the Fed is still expected to start cutting interest rates in June, the Fed's relative hawkish attitude compared to other central banks is expected to support the dollar. According to the CME FedWatch Tool, markets see an 10.8% probability of a 25 basis point rate cut at the Fed meeting in May, and a 75.1% probability of a rate cut in June (compared to 54.7% a week earlier), with about 80 basis points of cuts priced in for this year - much lower than the 160 or so that had been priced in at the start of the year.
The yen rose by 0.15% against the US dollar, to 151.2, helped by statements from Japan's top currency official Masato Kanda. He said that the current depreciation of the yen does not correspond to fundamental indicators and is clearly caused by speculation. Kanda warned that the government will take appropriate measures against excessive fluctuations of the yen, without excluding any options. Japan intervened in markets in 2022 to prop up the yen when the currency hit 151.95 against the dollar. Kanda's statement was made after the historic interest rate hike by the Central Bank at its March meeting. However, investors expect that rates in Japan will remain low for some time and, therefore, will maintain a significant difference in rates with the United States.
The Australian and New Zealand dollars rose moderately against the US dollar, receiving some support from a rebound in the yuan, given both are often used as liquid proxies for the Chinese currency.