Investing.com – The US dollar rose in early European trade on Tuesday, trying to bounce back from sharp losses at the end of last week, while the Japanese yen fell despite further threats of intervention.
At 04:35 EDT (08:35 GMT), the dollar index, which tracks the US currency against a basket of six other currencies, was up 0.12% at 105.090, after falling to 104.52 on Friday, the lowest level of A little over a month.
Dollar stabilizes after Friday's decline
The dollar held steady on Tuesday, recovering slightly from last week's losses after weaker-than-expected data led traders to once again start pricing in interest rate cuts by the central bank.
Traders are now pricing September as the Fed's preferred month to begin its interest rate cutting cycle.
The economic calendar is light next week, so the focus will be on the several Fed policymakers who are scheduled to speak.
Richmond Fed President Thomas Barkin has already begun to act, saying U.S. interest rates currently stand at such “restrained” levels that they could help reduce demand and soothe sticky inflationary pressures.
“It appears that the slightly weaker US jobs report on Friday was enough to put an end to any thoughts of a Fed hike this year,” analysts at ING said in a note. “And while the Fed's easing cycle has been priced in this year (45 basis points of cuts are now expected for this year), the biggest impact of last week's dual FOMC/nonfarm payrolls decision has been lower volatility across markets.”
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German industrial orders decline
In Europe, the index fell 0.1% to 1.0760, after data showed a rebound in March, supported by strong demand from the United States and China for German-made goods, but a disappointing month for industrial orders dashed hopes for a quick economic recovery.
The European Central Bank has signaled a rate cut in June, but there is still a great deal of uncertainty about what will happen to monetary policy next.
Its trading fell 0.2% to 1.2534, ahead of Thursday's meeting of .
“Our fundamental view is that it is still a bit early for the Bank of England to change its dovish stance and signal a rate cut in June,” ING said, with the bank eyeing a cut in August rather than June.
“However, the Bank of England's June rate cut is only 30% accepted by the market and we doubt that sterling will rise strongly if the BoE's language does not change on Thursday.”
The yen resumes its decline
In Asia, it rose 0.2% to 154.13, bouncing after the pair fell to a low of 151.86 on Friday for the first time since April 10, as weaker-than-expected monthly US jobs data added to Bank of Japan data suggesting official intervention may be… Its value amounted to more than $58 billion.
The yen resumed its decline despite Masato Kanda, the Japanese government's top currency diplomat, saying on Tuesday that he may have to take action against any disorderly movements in the foreign exchange market due to speculation.
The pair rose 0.4% to 0.6599, after it held interest rates steady as widely expected and warned that inflation will take longer to decline in the near term.
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But the Reserve Bank of Australia did not mention any plans for further rate hikes, disappointing traders who were bracing for such signals, especially after a hotter-than-expected inflation reading in the first quarter.