Markets Await US Inflation Data: Dollar Holds Steady, Japanese Yen Remains Vulnerable

13 Nov 2023 , 10:30 AM

On Monday, the dollar maintained its stability as traders anticipated upcoming inflation data from the United States, poised to provide insights into whether the Federal Reserve needs to take further action to curb inflationary pressures. Meanwhile, the Japanese yen remained susceptible, lingering close to a one-year low against the dollar, with markets vigilant for potential intervention by Tokyo.

The upcoming focus for many traders will be on the U.S. Consumer Price Index (CPI) numbers scheduled for release on Tuesday. The Federal Reserve’s recent policy meeting tempered its previously hawkish stance, though Fed Chair Jerome Powell hinted last week that the fight against inflation might not be concluded. Subsequent retail sales data will also contribute valuable insights into the demand dynamics of the resilient U.S. economy, which has demonstrated strength despite elevated borrowing costs.

The dollar index, a gauge of the dollar’s performance against a basket of currencies, was mostly unchanged at 105.80.

Despite the steadiness of the dollar, the Japanese yen continued to face challenges from increasing U.S. Treasury yields and sustained dollar strength. On Monday, the Japanese currency traded at approximately 151.58 yen against the dollar, just below the one-year low of 151.74 recorded at the close of October. Tony Sycamore, a market analyst at IG, noted that a robust figure from one of the U.S. economic data releases this week could propel the dollar/yen pair above the 151 threshold.