U.S. Dollar Consolidates vs Top Currencies

The dollar consolidated against other major currencies on Monday as traders waited for US inflation data that may help determine whether the Federal Reserve could lower borrowing costs in 2024 and by how much, Samuel Indyk and Brigid Riley reported for Reuters.

Recent softer-than-expected US labor market data and a Federal Reserve that ruled out further interest rate rises saw traders price in more easing from the Fed this year.

Recent softer-than-expected US labor market data and a Federal Reserve that ruled out further interest rate rises saw traders price in more easing from the Fed this year.

Markets are pricing in around an 80% chance of a rate cut by the Fed's September meeting, with about 40 basis points (bps) of reductions in total expected in 2024, LSEG data showed.

Comments by Fed officials last week varied as rate-setters debated whether interest rates were high enough.

A jump in consumers' inflation expectations, revealed in a survey on Friday, could further complicate the conversation. With recent data indicating an economy that is slowing slightly from the robust growth seen in 2023, investors are looking to confirm how sticky inflation is.