Jan 11, 2024: Several Asian currencies recorded modest gains on Thursday, with the U.S. dollar retracing a substantial portion of its early-year advances as investors awaited pivotal U.S. inflation data. The focus on the data is to gather insights into when the Federal Reserve might initiate interest rate cuts.
Meanwhile, the Japanese yen, lingering near one-month lows, continued to exhibit fragility as the prevailing market sentiment suggests the Bank of Japan may delay its shift from an ultra-dovish policy.
Dollar Steps Back, Eyes on CPI Data for Rate-Cut Signals
Both the dollar index and dollar index futures experienced a 0.1% dip during Asian trade, extending losses from the previous session. Traders are holding their positions, anticipating that the Federal Reserve will implement significant interest rate cuts in the course of 2024.
Market participants are particularly attentive to the Consumer Price Index (CPI) inflation data slated for release later on Thursday. This data is expected to play a crucial role in shaping expectations for interest rate cuts throughout the year. While headline inflation is projected to see a marginal uptick, core CPI is anticipated to register a further decline.