Dollar steady as sticky inflation dents rate cut expectations

The dollar remained steady on Monday following the release of data showing U.S. inflation staying high. This development has raised questions about when the Federal Reserve will begin its easing cycle. On the other hand, the yen continued to hover near the psychologically important 150 per dollar level. While the yen has seen some movement around this level recently, officials have commented on the currency’s stability. This has kept markets cautious about a possible intervention by Japanese authorities. U.S. markets were closed on Monday due to the Presidents’ Day holiday. The dollar index, which measures the value of the U.S. currency against major rivals, started the week with a slight decline. Traders are now predicting that the easing cycle may start in June, as opposed to the initial expectation of March. Data from last week indicated that an economic soft landing hasn’t been achieved. This, along with rising inflation, has made it difficult for the Fed to respond by lowering rates and has increased the likelihood of a recession. This week, investor focus will be on the release of the minutes from the previous month’s Fed meeting, as well as scheduled speeches by several Fed officials. The euro and sterling saw slight gains during trading. Retail sales in the UK grew at their fastest pace in nearly three years in January, giving a boost to the pound. However, expectations for Bank of England rate cuts remain unchanged.