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The Dollar Holds Its Ground Despite Looming Inflation Data

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(CTN News) – Thursday, the dollar traded in tight ranges against most of its competitors as traders waited for crucial US inflation data. Meanwhile, the attention on Japan’s big interest rate disparity helped the dollar gain momentum against the yen.

In the face of the Japanese yen, the dollar steadily rebounded after experiencing a decline of more than three percent in the previous week, which was its largest weekly percentage reduction since the beginning of December 2022.

As a result of the release of the Bank of Japan’s summary of ideas from its meeting in April, which revealed that many board members acknowledged the need to raise interest rates and eventually reduce the bank’s asset purchases, the yen experienced a little increase in the morning hours of the Asian trading session.

The move was rather short, and it was evident that the market was gloomy about the currency.

The markets are betting on two rate cuts this year as a result of the Fed policy meeting that took place this week and the unexpected decrease in job growth in the United States. On the other hand, there is still a significant gap between the extremely low yields of Japan and those of the United States.

The unexpected reversal by the Federal Reserve is not causing the market to be very anxious. It has been determined by Masafumi Yamamoto, who is the chief currency strategist at Mizuho Securities, that the market environment for the dollar/yen is favorable for the upward movement.

Traders are concerned about the possibility of Tokyo intervening in the currency market, which might lead to some sudden “nervous moves” when the value of the dollar increases, according to him. This would most likely keep the dollar/yen exchange rate stuck in the range of 155-160 levels.

A statement made by Masato Kanda, the senior currency diplomat for Japan, on Thursday emphasized that the Japanese government is ready to intervene in the currency market.

As in the next week, the focus will move to the consumer price index (CPI) and the producer pricing index (PPI) for the month of April in the United States. Market participants will be on the lookout for indications that inflation has resumed its downward trend toward the 2% target that the Federal Reserve has set.

It was announced overnight by Susan Collins, President of the Federal Reserve Bank of Boston, that the economy of the United States needs to slow down in order to bring inflation back to the levels that were desired.

The value of the Japanese yen stayed virtually steady at 155.59 per dollar,

While the dollar index rose by 0.05% to 105.55 during the same time period. Prior to the policy decision that will be made by the Bank of England later on Thursday, the pound sterling dropped by 0.07% to $1.2487.

At the same time as inflation is falling, the Bank of England is getting ready to take another step toward lowering interest rates for the first time in around four years.

At a time when the European Central Bank has already suggested that it will decrease borrowing prices, the most significant concern for investors is whether or not the Bank of England (BOE) signals a decline in June.

The value of the euro went unchanged at $1.0743.

The price of bitcoin fell by 0.21%, reaching $61,436.49.


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Alishba Waris is an independent journalist working for CTN News. She brings a wealth of experience and a keen eye for detail to her reporting. With a knack for uncovering the truth, Waris isn't afraid to ask tough questions and hold those in power accountable. Her writing is clear, concise, and cuts through the noise, delivering the facts readers need to stay informed. Waris's dedication to ethical journalism shines through in her hard-hitting yet fair coverage of important issues.

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