Steady Dollar Amid Inflation Concerns and Yen Intervention Looms

The U.S. dollar remains steady following modest U.S. inflation data, with implications for future rate cuts. The yen hovered near intervention levels, while investor sentiment improved after the U.S. avoided a government shutdown. Lower trading volumes are expected as the year-end nears.

The U.S. dollar held its ground on Monday after inflation data revealed only modest increases last month. This development eased some concerns over future U.S. rate cuts, while the yen lingered near 156 per dollar, raising the possibility of intervention by Japanese authorities.

Investor sentiment received a boost after Congress passed spending legislation, averting a government shutdown. Despite the Federal Reserve's indication of a measured pace of rate cuts, trading volumes are expected to thin as the year-end approaches.

Friday's inflation data showed moderate price increases, tempering fears over the extent of the Fed's rate cuts in 2025. However, core inflation remained above the 2% target. Meanwhile, the yen faced pressure due to a strong dollar, prompting potential intervention talks in Japan.