(MENAFN) During early Thursday trading, the dollar exhibited limited movement against most major currencies as traders awaited key US inflation data, seeking insights into the Federal Reserve's policy direction. Meanwhile, attention remained focused on the significant interest rate differential between Japan and the United States, contributing to some gains for the US currency against the yen.
The dollar's modest ascent against the yen followed a notable decline of over three percent the previous week, marking its largest weekly percentage drop since December 2022. In early Asian trade, the yen briefly received a boost after the Bank of Japan released summaries of views from its April meeting, indicating that several board members advocated for eventual interest rate hikes and reductions in the bank's bond purchases. However, this upward movement proved fleeting.
Market sentiment has been influenced by the Federal Reserve's recent monetary policy meeting and concerns over the sudden deceleration in US job growth, prompting speculation of two interest rate cuts this year. Nonetheless, the persisting disparity between Japan's remarkably low yields and those in the United States has underscored the complexity of currency dynamics.
Looking ahead, investor focus is anticipated to shift towards the upcoming release of the US April Producer Price Index (PPI) and Consumer Price Index (CPI) next week. These indicators will be closely monitored for indications that inflation is trending towards the central bank's targeted 2 percent rate, with market reactions likely to be influenced by any deviation from expectations.
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