During today's Asian trading, the US dollar consolidated against major currencies, remaining near its lowest level since July 28. Volumes are likely to be muted until the New Year, as many traders are out for holidays.
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 0.03% to 101.51. Since the beginning of December, the index has fallen by 1.9%, as data showing a slowdown in inflation, increased expectations that the Fed will soon begin easing monetary 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 99.7% probability of a rate cut in May 2024, with over 150 basis points of cuts priced in for next year.
The yen fell 0.1% against the US dollar, and is preparing to record a drop of about 8% for the year. However, since the beginning of December, the yen has strengthened by 3.7%, as market participants expect that the Bank of Japan will soon abandon its ultra-soft policy. Meanwhile, a summary of opinions at the December meeting of the Bank of Japan showed that policymakers see the need to maintain their ultra-loose monetary policy at the moment, with some calling for a deeper discussion of the future abandonment of large-scale stimulus measures. Experts said that the summary of opinions showed no sense of urgency to end the ultra-loose policies.