Asian session review: the US dollar is showing negative dynamics

During today's Asian trading, the US dollar declined slightly against major currencies, but remains near its highest level since December 13, while investors are awaiting the publication of data on the US labor market and are preparing for the Fed meeting, the results of which will be announced tomorrow.

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 0.08% to 103.52. As for the data, this week the JOLTs job openings report for December (on Tuesday), the ADP employment report for January (on Wednesday) and the nonfarm payrolls report for January (on Friday) will be published. These data will provide additional information about the state of the world's largest economy. However, the key event of this week will be the Fed meeting - although economists expect the Central Bank to leave rates unchanged, markets will focus on the tone that Fed Chair Powell strikes at the press conference and any hints of rate cuts in the near future. According to the CME FedWatch Tool, markets see a 46.6% probability of a 25 basis point rate cut at the Fed meeting in March and a 89.4% probability of a rate cut in May. In 2024, futures traders expect five rate cuts of 25 bps.

The Japanese yen rose 0.1% against the US dollar, helped by Japanese data. The Ministry of Internal Affairs and Communications said that in December the unemployment rate fell to 2.4%. That was beneath expectations for a reading of 2.5%, which would have been unchanged from November. The jobs-to-applicant ratio was 1.27 - shy of forecasts for 1.28, which also would have been unchanged. The participation rate fell to 62.8% from 63.1% in November.