Investing.com – The U.S. dollar rose in early European trade on Tuesday, seeking to recover from sharp losses late last week, while the Japanese yen retreated despite fresh intervention threats.
At 04:35 ET (0835 GMT), the dollar index, which tracks the U.S. dollar against a basket of six other currencies, was trading 0.12% higher at 105.090, after falling to 104.52 on Friday, its lowest. level just under a month.
The dollar is stabilizing after falling on Friday
The dollar stabilized currencies on Tuesday, recovering slightly from last week’s losses after softer-than-expected data showed traders were again weighing in on central bank interest rate cuts.
Traders now rate September as the Federal Reserve’s favorite month to begin its rate-cut cycle.
The economic calendar is busy this coming week, so the focus will be on several Fed policymakers scheduled to speak.
Richmond Fed President Thomas Barkin has already hit the ground running, saying U.S. interest rates are currently at such a “restrictive” height that they could help dampen demand and cool persistent inflation pressures.
“It appears that Friday’s slightly softer US jobs report was enough to put an end to any ideas of a Fed rate hike this year,” ING analysts said in a note. “And while the cost of the Fed’s easing cycle has risen this year (a 45bp cut is expected this year), the biggest impact of last week’s dual FOMC/NFP decision was the reduction in intermarket volatility.”
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Industrial orders in Germany fall
In Europe, shares traded 0.1% lower at 1.0760 after data showed they had rebounded in March, helped by strong demand in the US and China for German-made goods, but a disappointing month for industrial orders dashed hopes for a quick turnaround. economic recovery.
This signaled a rate cut in June, but there remains great uncertainty about what will happen to monetary policy after that.
traded 0.2% lower at 1.2534 ahead of Thursday’s US Bank meeting.
“Our main view is that it is too early for the Bank of England to change its cautious stance and signal a rate cut in June,” ING said, with the bank eyeing a rate cut in August rather than June.
“However, the Bank of England’s June rate cut is only priced at 30% by the market and we doubt sterling will strengthen too much unless the Bank of England’s wording changes on Thursday.”
The yen resumes its decline
In Asia, the price rose 0.2% to 154.13, picking up after the pair fell to 151.86 on Friday for the first time since April 10, as softer-than-expected monthly US employment data added to Bank of Japan data , which suggested that official intervention could amount to more than $58 billion.
The yen resumed its decline even as the Japanese government’s top currency diplomat, Masato Kanda, said on Tuesday that he may have to take action against any erratic, speculative currency movements.
The pair rose 0.4% to 0.6599 after rates held steady as widely expected and warned inflation would take longer to subside in the short term.
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But the RBA stopped short of mentioning any plans for further rate hikes, disappointing traders who had been bracing for such signals, especially after higher-than-expected inflation figures in the first quarter.