The dollar was mostly steady on Monday as investors looked for more evidence to map out the path for US interest rates, even as the Fed chair and other officials offered recently more cautious assessments despite the latest signs of slowing inflation.

Meanwhile, in forex trading today, the euro held at $1.0871, not too far from the nearly two-month peak of $1.0895 touched the previous week, after adding 2% since the start of May, lifted by the dollar’s drop tied to weaker-than-expected US growth and inflation data, and also shored up by a stronger euro zone economy.

Forex News Today: US CPI Rises

Forex news today reported that US consumer prices rose less than expected in April – a development that led markets to price their fifth of a point of Fed rate cuts this year.

But several Fed officials this week expressed concern about the timing of rate cuts and market expectations dipped a fraction below the 50 bp mark.

On Monday, the dollar index that tracks the US currency against six major peers crept 0.1% higher to 104.49. The dollar has come down nearly 2% since hitting more than a five-month high in April.

‘The barrage of Fed speakers will make it tough for investors this week,’ said Neil Jones, head of foreign-exchange sales at the currency services firm Mizuho Bank in London.

‘Often a selloff in the market because of a further rate cut bet will be countered by Fed speakers.’

Four Fed speakers – on top of the three we had last week – are on the docket for Monday, including Atlanta Fed President Raphael Bostic.

Markets also look forward to minutes from the Fed’s last meeting (due on Wednesday).

Forex News Today: Central bank trading opportunities

Survey-based economic data out of the eurozone, Germany, the UK, and the US is scheduled for this week, and more central bank speakers.

Meanwhile, the pound jumped to a two-month high of $1.2711, just below this level, ahead of a UK inflation report on Wednesday.

Meanwhile, the Japanese yen held at 155.73 per dollar as traders awaited any sign of official intervention.

The yen “has basically been in these narrow ranges for the last few days because of the volatility at the beginning of May, which was sparked by the apparent currency intervention from Tokyo,” Jones said in forex news today.

“In the next couple of months, the rally in gold and copper will further buoy the commodity currencies, particularly Australia.”

The Australian dollar was little changed, holding at $0.669 on Monday, but has risen 3.4% so far this month on the back of Australian inflation, that just seems to keep going higher.

Forex News Today: Oil price trading opportunity

Tight supply, strong global demand and large speculative positions are just some of the factors driving copper up this month as well.

Overnight, oil prices pushed a trifle higher after the helicopter crash that killed Iran’s president while health problems facing its king have raised the prospect of further instability in the Middle East.

World markets began the new week on a positive note, bolstered by renewed US disinflation hopes and China’s desire to support its struggling property sector, with the artificial intelligence boom again coming back into focus.

Forex news today: Wednesday, earnings from AI-bellwether Nvidia (NVDA.O) are due and expectations are high.

Shares in the company have nearly doubled this year, having trebled in 2023.

Revenue is projected to have rocketed to $24.8 billion this year from $7.2 billion a year ago, with earnings per share leaping to $5.57 from $1.09, according to LSEG data.

To start, AMD (AMD.O) gained more than 1% on Friday after Microsoft’s (MSFT.O) announcement that its cloud computing customers would have the option to use a platform of AMD’s AI chips to compete with Nvidia’s components.

Reddit (RDDT.N) also rose 10% on a deal with OpenAI to bring its content to ChatGPT.

In forex news today, U.S. growth remains robust, and aggregate annual earnings showed gains near 10%, buoying hopes for lower rates later this year Still, Treasury yields rose on Friday as the rally in relief over the April reading of consumer inflation faded after import prices remained sticky, with Federal Reserve officials – including Michelle Bowman – sounding hawkish.

There’s still 40 basis points of easing priced in Fed futures for this year, which equates to a 80% chance of a move by September.

Major Wall Street indexes continued their streak of weekly gains in forex news, with the Dow Jones Industrial Average closing above the 40,000 mark for the first time.

The week’s notable calendar points include the 20-year Treasury bond auction, the release of the latest minutes from the Federal Reserve’s most recent meeting, and Thursday’s flash May business surveys from across the world.

The market will be listening closely to Monday’s speeches from the Federal Reserve’s Vice Chair Philip Jefferson and Governor Chris Waller as that’s when Federal Reserve Chair Jerome Powell is expected to recover from a bout of COVID.

Chinese markets had a lacklustre reaction to wide-ranging government support for the housing sector today, with the mainland and Hong Kong benchmarks gaining just under half a per cent on Monday.

Previously battered shares in Chinese developers were a tad volatile as investors felt that the “historic” steps to stabilise the housing sector were woefully inadequate.

Hong Kong’s Mainland Properties Index ended a tick lower at 0.7%, clawing back some of this month’s 18% gain as markets anticipated inventory-clearing supports.

In addition to last week’s news that house prices nationwide fell for the fifth straight month, the Beijing government reported that premiums received from selling government land across the country fell 10% year-on-year from January to April.

Benchmark bond yields in Japan rose to a more than decade-high on Monday, marking an extending advance on expectations of stronger domestic monetary policy and a slick auction of 10-year inflation-linked JGBs.

The yen held steady, with the dollar little moved broadly.

Gold set record highs on Monday as markets kept an eye on Iranian politics after news of President Ebrahim Raisi’s death in a helicopter crash. Oil prices held steady.

Key diary items that may influence U.S. markets later on Monday include:

• U.S. corporate earnings from Palo Alto Networks, Nordson, and Keysight Technologies
• remarks by Federal Reserve Vice Chair Philip Jefferson, Fed Vice Chair for Supervision Michael Barr, Fed Board Governor Christopher Waller and Atlanta Fed President Raphael Bostic.

Forex News Today: US Treasury auctions

U.S. Treasury auctions of 3- and 6-month bills Indonesia’s central bank will leave its key interest rate steady over the coming quarter as it props up a beleaguered rupiah, with only a slim majority of economists predicting a cut in the final quarter of this year, after the United States almost certainly embarks on easing policy.

Bank Indonesia (BI) caught markets off guard last month, raising its seven-day reverse repurchase rate to 6.25% – the highest since 2016 – to steady the currency, which has lost over 7% this year.

Since then, the rupiah has gained more than 1% to take some pressure off the need for further tightening – but a cut remains months away: the currency is still down 3.5% so far this year, though somewhat less than some of its Asian counterparts.

Forex News Today: Indonesia’s growth

In Indonesia, where economic growth prospects are strong, Latin America is the only region where a majority of institutions in the Reuters April poll expect the key rate at the central bank to remain on hold through the next quarter.

While nearly 70% expect a reduction in 2022 Q4, they’re in the minority if the Federal Reserve starts raising rates, as most anticipate.

Although the key rate was hiked unexpectedly last month by Bank Indonesia (BI), the country’s central bank, to 6.25%, the highest since 2016, with the aim of stabilising the currency, it has rebounded more than 1% since then, providing some relief from pressures for further tightening.

But a rate cut is still many months away. The currency is off about 3.5% for the year, slightly less than some of its Asian peers.

Forex News Today: Fed’s actions

With the rupiah remaining fragile, any move by BI is “jeopardised by dollar strength and the Fed’s actions and risks are tilted to the slower start of the rate-cut cycle,” said Makoto Tsuchiya, economist at Oxford Economics.

The forex news today is that “we expect BI to continue to use various policy tools other than policy rate to ease policy stance (including forex intervention),” he said. “Mild gain in investment spending in Q1 should give BI reason to fear over-tightening.”

To defend the currency, the central bank has been draining its foreign-exchange reserves, which fell to $136 billion last month, a decline of $4.2 billion, biggest in 11 months.

Yet rupiah risks going lower, given a hawkish Fed outlook, with the first cut likely in September and possibly pushed to later in light of robust US economic data, weakening BI’s rates outlook.

Of these, 17 (or 55%) foresaw rates at 6.00% or lower by year-end, while 14 expected them at 6.25% or higher. ‘A BI rate cut is very unlikely given the Fed’s rate hold for a long period,’ said Elbert Timothy Lasiman, economist at Bank Central Asia.

Forex News Today: Bank of Japan

‘Domestically, there is no change given the market sees that BI would like to ease policy to boost slowing growth.

The foreign factor is the one that changes, given the market is adjusting to “high for longer” again.’ In forex news today,. The Bank of Japan has been reluctant to act on its own to raise interest rates for fear of derailing Japan’s fragile recovery.

But a slump in consumption could increase political pressure on the central bank to lift rates and combat the yen’s decline, blamed for energy and food import costs that are eating into household budgets.

Expect Kazuo Ueda, the Bank of Japan’s new governor, to signal a hawkish policy outlook in forex news today but add caveats due to the potential for delays in consumption recovery, analysts said.

Even after the BOJ ended eight years of negative rates in March, the yen depreciated by about 10% against the dollar so far this year, due to the vast difference between US and Japanese interest rates.

On Thursday, data showed that Japan’s economy shrank more than expected in the first quarter amid an increase in living costs caused by the weak yen and reduced exports, indicating the potential diminishing of the benefits for manufacturers from a weaker currency.

In forex news today, analysts saw only mild pressure on the BOJ to backtrack on the rate-hike schedule it outlined in April, even as the soft readings add to worries about the global economy as month-end flows in financial markets add to downward pressure.

As one report put it, policymakers are ‘looking through’ the soft readings to see if consumption takes off again later this year, as they believe it will, according to the IMF report.

The timing of the next hike ‘will depend on paper consumer prices, consumption, and wage data that will be reported through June,’ it said.

The BOJ is still clinging to the belief that higher wages will push up consumption, but it will probably wait for second-quarter GDP data, due in August, to see that happen.

‘We don’t see any need for the BOJ to make a policy change now,’ said Naomi Muguruma, chief bond strategist at Mitsubishi UFJ Morgan Stanley Securities.

The weak yen is emerging as a problem for Prime Minister Fumio Kishida, who is counting on consumption to help pull the economy out of deflation. ‘We are concerned about the (low) yen weighing on consumer sentiment and raising import costs,’ said a Japanese government official. If Kishida fails to keep his pledge to make inflation-adjusted wages positive by this autumn, he will lose much of his political support.

Some government officials and business leaders are increasingly calling for the BOJ to begin withdrawing stimulus and raise interest rates to near-zero levels.