Dollar remains stable on Monday after release of US inflation data
Date
12/23/2024 2:04:01 AM
(MENAFN) The dollar remained stable on Monday following the release of U.S. inflation data that revealed only a modest increase in prices last month. This tempered concerns about the pace of U.S. interest rate cuts anticipated for next year. Meanwhile, the Japanese yen hovered near 156 yen to the dollar, approaching levels that could prompt intervention by the bank of Japan. Market participants remained watchful of potential developments from Japanese policymakers as the yen’s weakness persisted.
Investor sentiment improved after the U.S. Congress managed to avert a government shutdown by passing spending legislation early Saturday. The successful resolution of the budget impasse added a layer of optimism to markets, though the holiday season is expected to result in subdued trading activity. With the year winding down, market participants anticipate reduced trading volumes, characteristic of the final weeks of December.
Last week, the Federal Reserve surprised markets by projecting a measured pace for future interest rate cuts. This announcement pushed Treasury yields higher, along with the dollar, but cast uncertainty over other economies, particularly in emerging markets. The central bank’s cautious outlook highlighted persistent challenges for global growth as major economies navigate the effects of tighter monetary policies.
The dollar index, which tracks the greenback’s value against six major currencies, held steady at 107.78 on Monday, close to the two-year high of 108.54 reached on Friday. The euro remained stable at USD1.0434, near a two-year low hit in November, reflecting a 5.5 percent decline over the year. Meanwhile, the yen weakened to 156.65 against the dollar, approaching a five-month low touched on Friday, raising the likelihood of intervention by Japanese authorities.
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