Dollar struggles to retain gains even as March rate cut odds recede
dollar struggled to keep gains in early Asian trade on Monday as looming central bank decisions in Japan and Europe forced a pause in its data-spurred rally late last week.
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View Details» Japan's yen was the notable mover in otherwise quiet trading, as it tiptoed away from Friday's one-month low of 148.80. The currency has been the worst hit against the dollar this year, tumbling about 5% in a swift reversal of December's bounce to five-month peaks near 140.
The Bank of Japan's two-day meeting begins on Monday. Wagers for an exit from negative rates at this meeting have been wound down in the wake of the New Year's Day earthquake on Japan's west coast alongside dovish BOJ commentary.
The dollar's trade-weighted index was down 0.07% at 103.19 and flat against the euro at $1.0898.
Its rally so far this year has been tentative and fickle as investors try to make up their minds about when the Federal Reserve will start cutting rates. Data late last week showing U.S. economic activity remains resilient despite interest rates at their highest level in decades caused markets to scale back expectations of rate cuts beginning as soon as in March.
San Francisco Federal Reserve Bank President Mary Daly on Friday said she believes the U.S. economy and monetary policy are in a «good place» and it is premature to think rate cuts are imminent.
Short-term interest rate futures market show traders are betting interest rate cuts will start in May, with the probability of a March cut dropping below 50%, down from near 80% in the first weeks of January, according to CME Group data.
Chris Weston, head of research at online broker Pepperstone, said those odds were
