Global Currencies in Flux Amid Economic Uncertainty

The U.S. dollar hovers near two-month lows as traders consider tariff concerns and potential interest rate cuts. Meanwhile, the yen gains on Japan's growth data and interest rate hike anticipations. The Australian dollar remains strong, facing possible rate cuts, while focus turns to the Federal Reserve's upcoming meeting minutes.

The U.S. dollar struggled near two-month lows on Tuesday, overshadowed by jitters over potential trade tariffs and the likelihood of U.S. rate cuts. This occurs as the Australian dollar remains close to its highest point in two months, despite pending market expectations for an anticipated interest rate reduction.

The Japanese yen has maintained its upward trajectory, aided by robust growth indicators that heighten expectations for another interest rate hike by the Bank of Japan within the year, possibly as early as July. Investors are eagerly waiting for Wednesday's release of the Federal Reserve meeting minutes to discern the impact of tariff risk considerations on U.S. monetary policy.

Recent U.S. economic data revealing a significant increase in consumer prices has supported the Federal Reserve's stance to delay immediate rate cuts. The debate intensifies as ANZ suggests sustained rate pauses could span the first half of this year, with rate cuts anticipated only in late 2025, contrasting with market expectations for a 40 basis point cut within the year.

(With inputs from agencies.)