SINGAPORE : The dollar was catching its breath on Monday after dropping last week when the Federal Reserve hinted at an end to the U.S. rate increase cycle, with traders turning their focus to U.S. inflation and bank lending data for the week ahead.
The yen slipped slightly, reflecting Friday's move higher in U.S. bond yields that followed strong jobs data.Last week the Federal Reserve and the European Central Bank each raised rates by 25 basis points and offered varying degrees of caution about the outlook, which markets took as signals that rate rises are slowing or stopping.
"If the Fed is proved right over the course of 2023, then it will make it harder for the dollar decline to extend," the analysts wrote."But for the time being, the market is likely to run with the theme of a peak in Fed rates justifying a clear peak in the dollar."