Mar 15 2024: On Friday, the dollar remained strong, poised to end a three-week losing streak following hotter-than-expected U.S. inflation data, which hinted at a potential delay in Federal Reserve interest rate cuts.
Meanwhile, the yen held steady as traders awaited the Bank of Japan (BOJ) meeting next week, where a significant shift away from its negative interest rate policy could occur, contingent upon Japan Inc delivering anticipated robust wage hikes.
Bitcoin prices experienced volatility, retracting from a record high reached on Thursday and declining by 4.43% to $67,541.00.
Recent data revealed a 0.6% increase in the U.S. producer price index for final demand in February, surpassing economists’ forecasts of a 0.3% rise. This followed strong consumer price index figures earlier in the week for a second consecutive month.
While the upcoming Federal Reserve meeting is not expected to yield interest rate adjustments, investors are keen on the interest rate forecast, dot plot, and remarks from Fed Chair Jerome Powell.
The series of persistent inflation reports prompted traders to lower their rate cut expectations, with the market now pricing in a 60% chance of rate cuts in June compared to 74% a week earlier, according to the CME FedWatch tool.
The dollar index, measuring the U.S. currency against six peers, saw a 0.068% rise to 103.45, on track for a 0.7% weekly gain, its first in four weeks.
The yen held steady at 148.32 per dollar, heading for a 0.8% weekly decline, its most significant since January. Speculation swirls around the Bank of Japan potentially ending its negative interest rate policy, especially with favorable wage negotiations outcomes expected.
Among other currencies, the Australian dollar and New Zealand dollar weakened, while the euro and sterling remained subdued ahead of upcoming central bank policy meetings.