Dollar At Two Week Lows

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Dollar At Two Week Lows

Dollar At Two Week Lows, Yen Gains On Rate Hike

Now that the prospects of a rate cut by the Federal Reserve have gone down once again, the weakness has started to show up in the greenback. As a result, the dollar started to lose against the Japanese yen, which was already at historic lows.

The US services sector has already started to show signs of a slowdown, which means the interest rates need to be lowered soon. However, it appears that the Fed is stopped by the fear that inflation may surge higher again.

Inflation Stalls In The Usa

Some of the losses seen in the USD recovered after comments from Fed Kaskari. According to him, inflation is stalling, which means that rate cuts will not be required in 2024.

Meanwhile, Fed Thomas Barkin believes that the inflation data is not encouraging at all. He also questioned whether the economic outlook is really changing or all of it is just a bump on the road.

The DXY was last seen near 104.14, with a chance of -0.077% for the trading session. Earlier, the DXY had touched a low of 103.910, the lowest level only seen on the 21st of March.

Looking ahead, the key focus of the dollar traders will be on the upcoming NFP report. According to forecasts, the month of March resulted in +200K jobs for the US economy.

Given this, it makes sense to think that Powell is likely thinking about cutting rates starting from June 2024. However, a strong NFP report could delay the rate cuts to the 3rd or 4th quarter of 2024.

Despite the recent gains seen in the JPY against the USD, it is still at 34-year low which means the BoJ still has a lot of work to do!

According to BoJ governor, they will only respond to the upcoming data with relevant monetary actions. In case the current market movements end up effecting the wages and inflation in Japan, the bank will intervene.

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