US Dollar Sways In Light Trading; Yen Gains

(CTN News) – The US Dollar attempted to stabilize on Tuesday amid thin holiday trading. Cooling inflation in the US economy could lead to interest rate cuts by the Federal Reserve.

The Japanese yen remained steady as the Bank of Japan may end its easy monetary policy. Currency movements were subdued due to public holidays in several markets. The New Zealand and Australian dollars reached five-month highs against the US Dollar.

The euro and British pound remained relatively unchanged. Recent data showed a decline in US prices, increasing expectations of a rate cut by the Federal Reserve in March. The Federal Reserve’s decision to potentially cut rates in 2024 weakened the US Dollar.

According to analysts at Wells Fargo, the Federal Reserve has made significant progress in addressing inflation, with core inflation starting the year closer to an annual rate of 5%.

However, they note that there is still work to be done in ensuring that inflation remains on a sustained trajectory towards the Fed’s 2% target.

Meanwhile, the dollar index remains near a five-month low, while the yen has risen slightly against the dollar in Asia. BOJ Governor Kazuo Ueda has expressed optimism about achieving the central bank’s inflation target, but has not yet decided on a specific timing to change its monetary policy stance.

In Japan, the jobless rate remains unchanged, and business-to-business service inflation remains steady. In China, the yuan has weakened against due to expectations of further monetary easing measures from Beijing.

At the conclusion of last week, five major state banks in China implemented interest rate reductions on certain deposits, marking the third instance of such cuts this year.

According to the official Shanghai Securities News, several publicly listed banks have also followed suit.

This series of cuts is expected to facilitate the People’s Bank of China’s efforts to ease monetary policy and will likely result in an influx of funds into wealth management products and bond funds, as stated in a report by Caitong Securities.

As a result of these developments, the onshore yuan experienced a slight decrease of 0.1% against the dollar, settling at a rate of 7.1433 per USD. Meanwhile, the offshore yuan currently stands at 7.1461 per dollar.

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