Dollar Weakens Ahead of Key US Inflation Data
Dollar Index Trades Lower as Market Anticipates Rate-Cutting Cycle
The US dollar saw a decline in early European trade, hovering near two-month lows as investors awaited crucial US inflation data to gain insights into the Federal Reserve’s potential rate-cutting timeline.
Market Speculation Surrounding Fed’s Interest Rate Cut
The Dollar Index, which monitors the dollar against other major currencies, showed a 0.1% decrease at 102.287, following a substantial weekly drop of over 1% last week, reaching levels last observed in mid-January.
Fed Chief’s Dovish Comments Impact Dollar Performance
Last week, the dollar faced significant pressure after remarks from the Fed chief hinted at a dovish stance, signaling a probable interest rate cut in the upcoming months. Mixed job data further fueled speculations around a potential June rate cut.
Focus on US Consumer Price Index Data
Investors are keenly awaiting the release of February’s consumer price index figures to assess the likelihood of Fed easing. Economists predict a 0.4% increase following January’s unexpected 0.3% rise.
Euro Strength and ECB’s Monetary Policy
The euro remained robust, trading 0.1% higher at 1.0944 against the dollar, sustaining its eight-week high from the previous week. The European Central Bank’s decision to maintain record-high rates hints at a potential rate cut in June to bolster the region’s economy.
GBP Performance and BoE Speculations
Sterling traded 0.1% lower at 1.2841, with market attention on the upcoming UK report and discussions surrounding wage growth and potential rate adjustments by the Bank of England.
Yen’s Surge and BOJ Meeting Expectations
The yen saw a 0.3% decline to 146.70 amid rising speculation of the Bank of Japan’s policy adjustments following an upward revision in GDP data. The yen’s recent surge to over one-month highs reflects growing confidence in policy changes.
