Investing.com — Most European and Asian currencies were in trouble Monday, with the dollar steady in thin trading as markets waited for more clues on U.S. interest rates from key inflation data later in the week.
Market holidays in the US and Britain kept trading volumes subdued.
Most regional currencies suffered some losses last week after a series of statements from Federal Reserve officials saw traders reassess their timelines for possible rate cuts by the central bank later this year.
Dollar Stable, PCE Inflation Waited
The , which measures the coin against a basket of its peers, and remained largely unchanged in European trade. The dollar had strengthened in recent sessions, supported by traders who revised their expectations for future Fed rate cuts.
Policymakers have raised doubts about the sustainability of a slowdown in US price pressures, raising expectations that the Fed could ultimately choose to leave rates at more than 20-year highs for an extended period , according to the .
Traders are now focusing this week on data – the Fed’s favorite inflation gauge – due Friday.
The euro is hovering around the flat line as the ECB decision looms
The euro didn’t stray far from the flat against the dollar on Monday, rising about 0.1% to $1.0850 at 04:11 ET (08:11 GMT).
Inflation data from the eurozone will also be released later this week, with economists predicting that prices rose slightly faster on a year-on-year basis in May than the previous month. The figures could play a role in how the European Central Bank will approach future interest rate policy decisions this year.
Spurred by data showing previous euro zone inflation data approaching the ECB’s 2% target, markets are widely betting the central bank will cut its key deposit rate by 25 basis points at its next meeting in June. In an interview with the Financial Times on Monday, ECB chief economist Philip Lane said that “barring any major surprises, there is enough in what we are seeing at the moment to lift the highest level of restrictions.”
Elsewhere, the British pound was unchanged against the dollar at $1.2740.
Japanese Yen Companies, Broader Asian Currencies Muted
In Asia, the Japanese yen pair fell marginally, with traders positioning themselves for more potential government intervention to support the currency. According to media reports, the government last intervened on May 1 during a public holiday. This move led to large losses for the USDJPY pair, although it has recovered much of these losses this month.
data from Tokyo, along with measurements about and will also appear later this week.
Other Asian currencies were muted. The Australian dollar pair rose slightly, while the Chinese yuan pair rose slightly after a stronger-than-expected midpoint fix. Data on Monday showed China’s economy grew in April.
The South Korean won pair fell slightly, while the Singapore dollar pair moved little.
The Indian rupee’s pair was also largely unchanged after falling sharply from record highs over the past two weeks.
Ambar Warrick contributed to this report.
