In terms of economic data, the week is looking relatively light, with attention focused on the Federal Reserve’s preferred inflation indicator, which will be published on Friday and could influence the outlook for interest rates in the United States.
In the currency market this Tuesday, March 26, the yen shows certain stability, trading just below its weakest level in 34 years, thanks to the continuous verbal intervention of the Japanese authoritieswhile the dollar experience setbacks.
Meanwhile, the euro stands at $1.0850 and the pound sterling at $1.2645, both registering slight increases on the day and remaining in the center of their recent ranges. The yen is trading at 151.25 units per dollar, also showing some strength on the day, although it has regressed more than one 1% since the Bank of Japan’s historic rate hike last week.
Despite this rebound, traders continue to pay attention to the interest rate differential between Japan and the rest of the world, especially with respect to the United States. It is highlighted that a break of 151.94 units per dollar, reached in October 2022, could take the yen to its lowest level since 1990.
Dollar: what data the market expects
Recalling past interventions, Japanese Finance Minister Shunichi Suzuki reiterates that he will not rule out any measures to address the weakening yen, agreeing with previous warnings from Tokyo’s top currency diplomat.
Regarding economic data, The week looks relatively sparse, with attention focused on the Federal Reserve’s preferred inflation indicator, which will be published on Friday and could influence the outlook for interest rates in the United States. The US core personal consumption price index (PCE) is anticipated to have increased 0.3% in February, keeping the annual pace at 2.8%.
Meanwhile, the Swiss franc continues its downward trend following the Swiss National Bank’s surprise interest rate cut the previous week. The dollar rose 0.17% to 0.9010 francs, and the euro advanced 0.3% to 0.9775 francs, close to its nine-month high reached after the SNB action.
On the Chinese front, the yuan remains the subject of attention, especially after its sharp drop on Friday. Despite the People’s Bank of China setting a firmer exchange rate than expected, the yuan is trading somewhat weaker in the mainland market, at 7.219 units per dollar, while the offshore yuan shows some strength, standing at 7.249 units per dollar.
Source: Ambito
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