The dollar faced challenges ahead of American inflation data set to be released on Wednesday, while the yen gained ground following comments from the Governor of the Bank of Japan (BoJ) regarding a potential interest rate hike at the upcoming January meeting.
The greenback experienced a modest decline of 0.03% against the euro, trading at 1.0311 dollars per euro, and fell by 0.06% against the British pound, reaching 1.2224 dollars per pound.
A consensus among economists surveyed by Bloomberg predicts an increase in the Consumer Price Index (CPI) for December in the United States, expected to rise to 2.9%, up from 2.7% in November.
Analysts emphasized that the Federal Reserve (Fed) must “at a minimum” see “substantial progress in disinflation” before contemplating further rate cuts.
“Without this, demand in the United States remains too robust to warrant any additional easing,” they stressed, expressing concerns over “uncertainties related to trade policy” once Donald Trump takes office in the White House.
On Monday, the American currency reached its highest level since November 2022 against the euro and since November 2023 against the pound.
The Japanese yen appreciated by 0.69% against the dollar, trading at 156.87 yen per dollar.
BoJ Governor Kazuo Ueda fueled market expectations for a potential interest rate hike next week by discussing this possibility on Wednesday, indicating growing confidence in rising wages within the country, as reported by Bloomberg.
