Investing.com – The US dollar rose in early European trading on Tuesday, trying to stage a comeback after sharp losses late last week, while the Japanese yen retreated despite more intervention threats.
At 04:35 ET (08:35 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was trading 0.12% higher at 105.090, after falling to 104.52 on Friday, the lowest level for just under a month.
The dollar remains stable after Friday’s decline
The dollar stabilized currencies on Tuesday, recovering slightly from last week’s losses, after disappointing data led traders to price in further interest rate cuts by the central bank.
Traders now view September as the preferred month for the Federal Reserve to start its interest rate cutting cycle.
The economic calendar is light this coming week, so the focus will be on several Fed policymakers speaking.
Richmond Fed President Thomas Barkin has already set the ball rolling by saying that US interest rates are currently at such “restrictive” levels that they could help dampen demand and ease persistent inflationary pressures to cool.
“It appears that Friday’s slightly softer US jobs report may have been enough to undermine any idea of a Fed rate hike this year,” ING analysts said in a note. “And while the pricing of the Fed’s easing cycle has increased this year (45 basis points of cuts are now expected this year), the biggest impact from last week’s FOMC/NFP double-header is the reduction in market volatility.”
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German industrial orders are falling
In Europe, trading was 0.1% lower at 1.0760 after data showed this recovered in March, supported by strong US and Chinese demand for German-made goods, but a disappointing month for industrial orders lifted hopes on a rapid economic recovery.
It has signaled a rate cut in June, but much uncertainty remains about what happens next with monetary policy.
was trading 0.2% lower at 1.2534, ahead of Thursday’s meeting of the .
“Our core view is that it will still be a bit early for the BoE to shift its cautious stance and signal a rate cut in June,” ING said, with the bank looking at a cut in August instead of June.
“However, a BoE rate cut in June is only 30% priced in by the market and we doubt sterling will have to rise too much if the BoE’s language remains unchanged on Thursday.”
The yen resumes its decline
In Asia, it rose 0.2% to 154.13, bouncing after the pair fell to a low of 151.86 on Friday for the first time since April 10, after softer-than-expected monthly US jobs data added to the figures from the Bank of Japan, which suggested official intervention could have taken place. amounted to more than 58 billion dollars.
The yen has fallen again despite the Japanese government’s top currency diplomat, Masato Kanda, saying on Tuesday that the currency may need to take action against disorderly, speculatively driven currency movements.
The pair rose 0.4% to 0.6599 after yields held steady as widely expected and warned that inflation will take longer to fall in the near term.
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But the RBA made no mention of plans for further rate hikes, disappointing traders preparing for such signals, especially after higher-than-expected inflation in the first quarter.
