The dollar remained stable on Monday following reports of subdued U.S. prices, increasing expectations of a potential interest rate cut by the Federal Reserve in June. Meanwhile, the yen stayed close to 152 per dollar, prompting caution among traders about potential intervention measures.
According to the Commerce Department's Bureau of Economic Analysis, the Personal Consumption Expenditures (PCE) price index climbed 0.3% in February, slightly below economists' expectations. However, consumer spending saw a significant uptick last month, indicating the economy's resilience.
Federal Reserve Chair Jerome Powell expressed satisfaction with the latest inflation figures, aligning with his previous statements. Market indicators now suggest a higher probability of a rate cut in June, with expectations of multiple cuts throughout the year.
Analysts from Citi anticipate a rate cut by the Fed in June and potentially further cuts later in the year, depending on economic activity and labor market conditions.
In the currency market, the euro and sterling saw minor gains, while the dollar index softened slightly but remained near its recent high. Attention remained on the yen, which approached levels not seen since 1990, prompting concerns about intervention by Japanese authorities.
Japan's stance on currency intervention remains uncertain, although recent developments and statements from officials suggest a willingness to act against excessive yen movement. Analysts predict intervention in the 152–155 per dollar range, especially considering the yen's weakness against the Chinese yuan.
Other currencies, including the Australian and New Zealand dollars, experienced modest gains. In the cryptocurrency market, bitcoin and ether saw moderate increases in value.
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