The dollar remained stable on Monday, influenced by the U.S.’s latest PCE data indicating a potential for the Federal Reserve to reduce interest rates in June, while the yen stayed close to 152 per dollar, sparking speculation about possible market intervention by Japan.
The Commerce Department reported a 0.3% increase in the PCE price index for February, slightly below economists’ predictions of a 0.4% rise. Additionally, consumer spending saw its most significant increase in over a year last month, showcasing the economy’s enduring strength. Most global markets were closed last Friday.
Fed Chair Jerome Powell viewed the recent inflation data positively, aligning with expectations set during the last Fed policy meeting. Market predictions now lean heavily towards a rate cut by the Fed in June, with expectations of up to five cuts throughout the year if labor markets soften further, as per Citi strategists.
The euro and sterling both experienced slight gains against the dollar, which itself saw a minor decrease in its index value but remained near a six-week peak. The yen’s continued decline, reaching a 34-year low against the dollar, has kept market watchers alert to Japan’s potential intervention after two instances in 2022.
Japan is facing a difficult decision on managing the yen, particularly after its fiscal year-end and recent official statements aimed at stabilizing the currency. The possibility of intervention is anticipated if the yen reaches between 152 to 155 per dollar, especially as it also weakens against the Chinese yuan.
In other currency news, the Australian dollar rose by 0.21% to $0.654, while the New Zealand dollar increased by 0.20% to $0.599. In the realm of cryptocurrencies, Bitcoin experienced a significant gain of 1.83%, reaching $70,927.00, and Ether surged by 3.46% to $3,619.20.
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