Dollar recovers, yen weakens as investors await US inflation data, Federal Reserve decision
(MENAFN) In early trading on Monday, the dollar made a modest recovery, while the yen retraced some of its recent gains. This shift comes as investors remain uncertain about the Federal Reserve's forthcoming decision on interest rates, anticipated later this month. Market participants are awaiting U.S. inflation data due this week, which is expected to provide further insight into the Fed’s potential interest rate cut.
Meanwhile, inflation concerns in China are affecting currency markets. Data revealed that consumer prices in China increased at the fastest rate in six months in August, yet producer price deflation continued to worsen. This situation has led to calls for additional stimulus measures to support the country's struggling economy. As a result, the yuan weakened, with the mainland yuan down 0.3 percent to 7.1117 per dollar, and the offshore yuan falling 0.27 percent to 7.1142 per dollar.
Currency movements were relatively subdued following the release of long-awaited U.S. jobs data on Friday, which failed to offer clear guidance on whether the Federal Reserve will implement a 25 or 50 basis point rate cut at its upcoming meeting. The yen experienced a decline of 0.44 percent, trading at 142.92 against the dollar, after having surged 2.73 percent the previous week amid market risk aversion and volatility following the U.S. non-farm payrolls report.
The euro and the pound also saw minor declines, with the euro falling 0.1 percent to USD1.1075 and the pound decreasing 0.08 percent to USD1.3119. The dollar index, which measures the greenback against a basket of major currencies, rose by 0.13 percent to 101.33 points. Additionally, the Australian dollar rose slightly by 0.04 percent to USD0.6673, recovering from a significant drop on Friday, while the New Zealand dollar fell 0.13 percent to USD0.6167, remaining near a two-week low.
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