FOREX-Dollar oscillates on less dovish Fed comments; yuan steady after inflation data
The producer price index (PPI) slid 2.5% from a year earlier in January, compared with a 2.6% slide forecast in the Reuters poll. "We expect the Chinese authorities to favour maintaining stability in the yuan going into the Lunar New Year holidays, with dollar/onshore yuan likely to remain within the 7.18-7.22 range for now," said Wei Liang Chang, currency and credit strategist at DBS.
The U.S. dollar was trading in a tight range on Thursday as traders digested less dovish remarks from policymakers overnight and looked ahead to fresh economic data from the United States. Attention was also on inflation data out of China in the Asian morning amid concerns about deflation in the world's second-largest economy.
Overnight, several Fed speakers gave a range of reasons for feeling little urgency to start easing policy in the United States soon or to move quickly once they do. "For the moment, policy remains well positioned, as we carefully assess the evolving data and outlook," Boston Fed President Susan Collins said, adding that she believes it will be "appropriate to begin easing policy restraint later this year."
The market is pricing in an 18.5% chance the Fed will begin to cut rates in March, down significantly from the start of the year, according to CME Group's FedWatch Tool shows. Traders see a nearly 60% chance of a 25 basis point cut in May. The greenback slipped overnight after rising above its 100-day moving average on Monday and Tuesday for the first time since late November, propelled by Friday's surging U.S. jobs data.
The dollar index, a measure of the U.S. currency against six major peers, was last hovering around 104.00. Given the repricing in markets over the past month, the dollar around 104 "looks spot on," said Tony Sycamore, market analyst at IG.
The dollar will need a fresh push to test resistance levels around 104.60 and 104.80, with the Consumer Price Index for January released on Feb. 13 the likely first opportunity, he added. The euro was up 0.06% at $1.0777 per dollar, holding above its lowest level since Nov. 14 at $1.0722 hit on Tuesday.
Sterling was largely unchanged at $1.26305. The Japanese yen, meanwhile, was flat versus the greenback at 148.18.
Elsewhere in Asia, China's consumer prices extended their decline for a fourth month in January while producer prices also dropped, underscoring deflationary risks facing the world's second-biggest economy as it struggles to mount a solid recovery. The consumer price index (CPI) fell 0.8% in January from a year earlier, but rose 0.3% month-on-month, data revealed.
Economists polled by Reuters had forecast a 0.5% fall year-on-year and a 0.4% gain month-on-month. The producer price index (PPI) slid 2.5% from a year earlier in January, compared with a 2.6% slide forecast in the Reuters poll.
"We expect the Chinese authorities to favour maintaining stability in the yuan going into the Lunar New Year holidays, with dollar/onshore yuan likely to remain within the 7.18-7.22 range for now," said Wei Liang Chang, currency and credit strategist at DBS. The offshore Chinese yuan was stuck near $7.206 versus the dollar.
In cryptocurrencies, bitcoin rose 0.94% to $44,602.23.
(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)