The yen is set to post its first monthly gain since March

31 Jul 2023 , 10:18 AM

Following a tumultuous session at the end of last week after the Bank of Japan (BOJ) loosened its hold on interest rates, the yen steadily rose on Monday, on track to reverse three consecutive months of decline.

The US dollar, on the other hand, was on track for a monthly loss as the Federal Reserve’s aggressive rate-hike cycle – a key driver of the currency’s strength – appeared to have ended with last week’s 25-basis-point increase.

In other news, the dollar fell broadly in early Asian trade, with the dollar index holding steady at 101.62.

It was on track for a 1.2% monthly drop, extending its loss to a second month.

The annual U.S. inflation rate climbed at its slowest pace in more than two years in June, according to data released on Friday, with underlying price pressures declining, reducing pressure on the Federal Open Market Committee (FOMC) to continue hiking rates.

The euro gained 0.05% to $1.1020 and remained on track for a 1% monthly gain, despite the fact that the European Central Bank policy meeting last week boosted the likelihood of a rate halt in September.

Sterling rose 0.04% to $1.2854 ahead of the Bank of England’s policy meeting this week, where a quarter-point rate hike is expected.

In Asia, China’s July purchasing managers index (PMI) statistics are anticipated later on Monday, providing more insight into the world’s second-largest economy.

The Australian dollar, which is frequently seen as a liquid proxy for the yuan, was 0.26% higher at $0.66645, while the New Zealand dollar was 0.28% higher at $0.6170.

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