(MENAFN) On Thursday, the movement of the dollar remained relatively subdued when compared to other currencies, with traders eagerly anticipating the release of crucial US inflation data. This data was seen as pivotal in providing insights into the potential policy moves of the Federal Reserve, the US central bank.
Simultaneously, attention was drawn to the significant interest rate differential between Japan and the United States, a factor that contributed to the dollar making modest gains against the yen.
Following a notable decline of over three percent the previous week, the dollar showed gradual signs of recovery against the yen, marking its most significant weekly percentage drop since early December 2022.
Early Asian trading saw a minor uptick in the yen's strength, attributed partly to the Bank of Japan's release of its April meeting summary, which indicated a growing sentiment among board members in favor of eventual interest rate hikes and a reduction in the bank's bond purchases. However, this upward movement proved short-lived.
Market sentiment was also influenced by the recent monetary policy meeting of the US central bank, coupled with a sudden deceleration in job growth within the United States. These developments fueled speculations in the market about the possibility of two interest rate cuts within the year. Nevertheless, the substantial disparity in yields between Japan and the United States persisted.
Attention now shifts to the forthcoming release of the US producer price index for April, followed by the consumer price index scheduled for next week. These releases are eagerly awaited by the markets, as they seek indications of whether inflation is continuing its downward trajectory towards the central bank's target of 2 percent.
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