During today's Asian trading, the US dollar consolidated against major currencies, while market participants continued to wonder when the Fed would begin easing 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) rose by 0.03% to 102.45. The US dollar remains under pressure as Friday's data indicating a drop in producer prices increased expectations of a Fed rate cut. According to the CME FedWatch Tool, markets see a 70.0% probability of a 25 basis point rate cut at the Fed meeting in March and a 100% probability of a rate cut in May, with almost 140 basis points of cuts priced in for this year.
The Chinese yuan fell by 0.15% against the US dollar, reaching its lowest level since December 13, as the Central Bank of China maintained the rate on medium-term lending facility (MLF) unchanged, at 2.5%. Markets widely expected a reduction in the MLF rate. According to experts, the major factor that is holding the Central Bank back was lingering concerns about the renminbi. Meanwhile, the Central Bank also conducted CNY 89 billion of seven-day reverse repo operations at an interest rate of 1.8%, saying it had taken such measures to keep reasonable and ample liquidity in the banking system. Investors' attention is gradually shifting to Chinese data (to be released on Thursday), which will help clarify the economic outlook.
The Japanese yen fell by 0.4% against the US dollar, as investors expected that the Bank of Japan's policymakers would not make changes to monetary policy parameters at the next meeting (January 23).