Dollar gains before key inflation data

NEW YORK, March 28 – The dollar gained on the euro on Thursday before key US inflation data due on Friday and as investors squared positions for month- and quarter-end.

The Japanese currency was also modestly weaker at 151.38 per dollar having traded just shy of the 152 mark at its weakest since 1990 on Wednesday before Japan’s top monetary officials suggested they were ready to intervene to prevent further declines.

This week’s main US economic focus is Personal Consumption Expenditures (PCE) data due on Friday, which will come after hotter-than-expected consumer and price inflation releases for January and February.

Traders will look for any new clues on whether the Federal Reserve remains on track to cut rates as soon as June as inflation remains sticky and economic growth stays strong.

Helen Given, FX trader at Monex USA, said that higher-than-expected inflation so far this year is unlikely to last, which should keep the Fed on pace for three 25 basis points cuts this year.

The dollar rallied earlier on Thursday following comments from Fed Governor Christopher Waller late on Wednesday that recent disappointing inflation data affirms the case for the US central bank holding off on cutting its short-term interest rate target.

But Given said that move was “a little bit outsized and I think it really has to do with the fact that there’s just slim flows across the world.”

US Treasuries and stock markets will be closed for the Good Friday holiday and foreign exchange markets are likely to be lightly staffed, which may increase volatility.

Fed Chair Jerome Powell is also due to speak on Friday.

Data on Thursday showed that the US economy grew faster than previously estimated in the fourth quarter, lifted by strong consumer spending and business investment in nonresidential structures such as factories.

The euro reached USD 1.0775, its lowest in five weeks, and was last down 0.34% at USD 1.0789. The pound weakened 0.15% to USD 1.262.

The dollar index rose 0.1% to 104.52, after earlier touching 104.73, its highest since mid-February.

INTERVENTION WATCH

Should the inflation data on Friday surprise on the upside and support the dollar, its most dramatic impact could be on the yen. Market participants say there is a dense thicket of options restricting moves in dollar/yen around the 152 level, and so a breakthrough could trigger more significant moves.

“Once dollar/yen touches 152, I think there will probably be a sharp move upward, and that’s when intervention could take place,” Takeshi Ishida, a currency strategist at Resona Holdings, said.

Japanese authorities held a meeting on Wednesday on the currency’s weakness and ramped up their verbal warnings, putting the market on the lookout for any signs that words are being backed up with action.

Japanese Prime Minister Fumio Kishida also said on Thursday the government will not rule out any options in addressing excessive moves in the currency market, stressing Tokyo’s resolve to step into the market if it sees the yen’s fall as overdone.

“Each time that currency officials in Japan have talked about this, it’s had less and less of an impact on yen pricing,” Given said. “Because of that, we are now looking at a real tangible intervention risk.”

Japan intervened in the currency market three times in 2022, selling the dollar to buy yen, first in September and again in October as the yen slid towards a 32-year low of 152 to the dollar.

A summary of opinions at the Bank of Japan’s March meeting released last Thursday gave the currency little support, showing many policymakers saw the need to go slow in phasing out ultra-loose monetary policy.

Meanwhile, China’s central bank set the yuan fixing at the widest gap against Reuters’ estimate in nearly five months, as authorities step up efforts to prevent sharp declines in the currency. The yuan slumped to a four-month low last Friday.

The onshore yuan was mostly flat at 7.2256 per dollar, while offshore it weakened to 7.2615 per dollar.

The Australian dollar fell as low as USD 0.6486, the weakest since March 5. As well as being hurt by Waller’s remarks, data from Australia showed retail sales came in below economists’ expectations in February.

In cryptocurrencies, bitcoin gained 2.91% to USD 70,848.75.

(Reporting By Karen Brettell; Additional reporting by Brigid Riley and Alun John; Editing by Andrew Heavens and Jane Merriman)

Gold hits record highs on safe-haven demand, US rate cut bets

March 28 – Gold prices hit a record high on Thursday, and logged their best month in over three years, propelled by US interest rate cut expectations and strong safe-haven demand.

Spot gold gained 1.2% to USD 2,220.85 per ounce as of 1:50 p.m. EDT (1750 GMT), logging its best month since July 2020, at a 9% increase, and a second straight quarterly rise. Bullion hit a record high of USD 2,225.09 per ounce earlier in the session.

US gold futures settled 1.2% higher at USD 2,238.4.

Traders are “position squaring ahead of the holidays and (increasing) trading activity into the month-end and quarter-end,” said Daniel Ghali, commodity strategist at TD Securities, which has boosted gold prices.

Gold could rise further if the markets start to expect a deeper Fed cutting cycle, and has the potential to “hold on to these highs, but we do see signs of buying exhaustion emerging in the very near term,” Ghali added.

The prices are also gaining due to “the fact that there are still major geopolitical tensions globally,” which could push investors to turn to gold as a neutral reserve asset, said Everett Millman, chief market analyst with Gainesville Coins.

While there are some indications that inflation is running hotter than policymakers would like, that does not necessarily explain the high valuations for gold right now, Millman added.

The US core personal consumption expenditure (PCE) price index report is due on Friday, which could help investors gauge the Fed’s policy stance.

Traders are currently pricing in a 64% chance of a June rate cut, according to CME’s FedWatch tool.

“The new & higher Gold floor is USD 2,000/oz which is symbolic of this new macro regime – Central Banks are tolerating ‘higher for longer’ inflation,” MKS PAMP wrote in a note.

Silver gained 0.7% to USD 24.82 per ounce, platinum rose 1.4% to USD 906.33 and palladium added 3% to USD 1,012.72. All three metals were bound for monthly gains.

(Reporting by Anjana Anil and Kavya Balaraman in Bengaluru; Editing by Tasim Zahid and Shinjini Ganguli)

Oil rises more than USD 1 a barrel on tighter supply outlook

NEW YORK, March 28 – Oil prices jumped more than USD 1 a barrel on Thursday, closing out the month higher on the prospect of OPEC+ staying the course on production cuts, ongoing attacks on Russia’s energy infrastructure, and a falling US rig count tightening crude supplies.

Brent crude futures for May settled at USD 87.48 a barrel, its highest level since Oct. 27, after gaining USD 1.39, or 1.6%. The more actively traded June contract settled at USD 87 a barrel, rising USD 1.58, with the May contract expiring on Thursday.

US West Texas Intermediate (WTI) crude futures for May delivery settled at USD 83.17 a barrel, rising USD 1.82, or 2.2%.

On the week, Brent rose 2.4% and WTI gained about 3.2%. Both benchmarks finished higher for a third consecutive month.

In the prior session, oil prices had come under pressure from last week’s unexpected rise in US crude oil and gasoline inventories, driven by an increase in crude imports and sluggish gasoline demand, according to Energy Information Administration data.

However, the crude stock increase was smaller than the build projected by the American Petroleum Institute, and analysts noted the increase was lower than expected for the time of year.

“We … expect US inventories to rise less than normal in reflection of a global oil market in a slight deficit,” SEB analyst Bjarne Schieldrop said. “This will likely hand support to the Brent crude oil price going forward.”

US refinery utilization rates, which rose 0.9 percentage points last week, also supported prices.

The oil and gas rig count, an early indicator of future output, also fell by three to 621 in the week to March 28, according to energy services firm Baker Hughes.

The US economy, meanwhile, grew faster than previously estimated in the fourth quarter. Gross domestic product increased at a 3.4% annualized rate from the previously reported 3.2% pace, the Commerce Department’s Bureau of Economic Analysis said.

“The strength in the stock market suggests strong forward earnings that are, in turn, hinting at a surprisingly strong US economy conducive toward better-than-expected energy product demand,” said Jim Ritterbusch of energy consultancy Ritterbusch and Associates.

Inflation data also affirmed the case for the US Federal Reserve to hold off on cutting its short-term interest rate target, a Fed governor said on Wednesday, but he did not rule out trimming rates later in the year.

“The market is converging on a June start to cuts for both the Fed and the European Central Bank,” JPMorgan analysts said in a note. Lower interest rates typically support oil demand.

Investors will watch for cues from a meeting next week of the Joint Monitoring Ministerial Committee of the producer group the Organization of Petroleum Exporting Countries (OPEC).

Increased geopolitical risk has raised expectations of possible supply disruption, but OPEC+ is unlikely to make any oil output policy changes until a full ministerial gathering in June.

Attacks by Ukraine on Russian energy infrastructure have also boosted the sentiment around global crude supplies tightening and helped to support oil prices, said Again Capital LLC partner John Kilduff.

“It’s a prime target, and they appear to have not heeded the ask by the Biden administration to not attack Russian energy infrastructure,” Kilduff said.

(Additional reporting by Ahmad Ghaddar, Katya Golubkova in Tokyo and Sudarshan Varadhan in Singapore; editing by Jason Neely, Barbara Lewis, Jane Merriman, and Marguerita Choy)

China profits eyed as Xi meets US biz chiefs

March 27 – Chinese industrial profits and Australian inflation top the Asian and Pacific economic calendar on Wednesday, against a backdrop of reasonably firm global equity markets and risk appetite ahead of key US inflation data due later in the week.

The economic, business, and political spheres are also set to collide in Beijing, where Chinese President Xi Jinping will meet with US business leaders, according to three sources with knowledge of the matter, in a follow up to his November dinner with US investors in San Francisco.

The audience with Xi follows Chinese Premier Li Qiang not meeting visiting foreign CEOs at the China Development Forum in Beijing from March 24 to 25, which reignited concerns over transparency in China’s economy and deteriorating economic ties with the United States.

But Xi’s personal intervention might be a sign of his commitment to ensuring China is open for business, and improving Sino-US relations. Or at least preventing them from deteriorating any further.

China’s economy, markets, and investors could certainly do with some good news.

Chinese stocks are on track to post their first quarterly gain in four quarters, but that is due to a strong rebound from five-year lows in February that has since faded – Chinese stocks are barely up for the month of March.

This has held Asian stocks back too – the MSCI Asia ex-Japan index is up only 1% this year, significantly lagging the MSCI World (+7%) and the MSCI global emerging market index (+1.5%).

Figures on Wednesday will give the first insight into the health of China’s industrial firms’ profitability this year, with January and February numbers due for release.

Industrial profits fell 2.3% in 2023, their second straight yearly decline. But there were some signs of improvement at the end of last year – profits rose 16.8% in December from a year earlier, extending gains for a fifth month.

The other main economic indicator on Wednesday is Australian consumer inflation for February. Economists expect the annual rate to rise slightly to 3.5% from 3.4% in January.

Aussie rates traders don’t expect the Reserve Bank of Australia to begin cutting rates until September, and are only pricing in 40 basis points of easing this year.

The yen, meanwhile, remains perilously close to lows not seen since 1990. Japanese officials are cranking up the verbal intervention – Finance Minister Shunichi Suzuki warned on Tuesday that “rapid currency moves are undesirable” – but it isn’t translating into much upside for the yen.

That may only come if there’s a sufficient decline in US yields and rate expectations, which may not come until after US PCE inflation on Friday. A hotter-than-forecast report, however, and the yen could quickly slide through 152 per dollar and force Tokyo to act.

Here are key developments that could provide more direction to markets on Wednesday:

– China industrial profits (Jan, Feb)

– China President Xi Jinping meets US business leaders

– Australia consumer inflation (February)

(By Jamie McGeever; Editing by Josie Kao)

Dow, S&P fall for third straight session with inflation data eyed

NEW YORK, March 26 – US stocks slipped on Tuesday, giving up modest gains late in the session to send the Dow and S&P 500 to their third straight decline, as investors awaited economic data in a holiday-shortened week to gauge the Federal Reserve’s policy path.

Stocks struggled for upward momentum even as Tesla gained 2.92% after CEO Elon Musk unveiled the electric vehicle maker’s one-month trial of its Full Self-Driving technology to existing and new customers in the United States. The stock is up about 4% for the week but remains down more than 28% for the year.

The focus remains on a key reading of the Personal Consumption Expenditures Price Index (PCE), the Fed’s preferred inflation gauge. The data is due on Friday when US markets will be shut for the Good Friday holiday.

The index is expected to have risen 0.4% in February and 2.5% annually. Core inflation, which excludes volatile food and energy components, is estimated to have advanced 0.3% last month, keeping the annual pace at 2.8%, economists polled by Reuters said.

“The big number is Friday. That’s the number everyone’s going to pay attention to and whatever happens in the meantime is going to be noise, so I don’t anticipate a whole lot happening until we get that data point,” said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco.

“The one thing that would be death, death for this market is if somehow something came out that led people to believe that the fed funds rate has not topped out yet. If for some reason people thought the Fed was even giving an inkling to raising rates further, stand out of the way.”

On the economic front, orders for long-lasting US manufactured goods increased more than expected in February, while business spending on equipment showed tentative signs of recovery. In a separate report, the Conference Board said its consumer confidence index was little changed at 104.7 in March.

The Dow Jones Industrial Average fell 31.31 points, or 0.08%, to 39,282.33. The S&P 500 lost 14.61 points, or 0.28%, at 5,203.58 and the Nasdaq Composite slid 68.77 points, or 0.42%, to 16,315.70.

The three major US indexes hit record highs last week after the Fed maintained its projection for three interest-rate cuts this year.

Markets have been slowly increasing expectations the central bank will cut rates by at least 25 basis points in June, currently pricing in a 70.4% chance, the CME’s FedWatch Tool showed, up from 59.2% last week.

Trump Media & Technology group jumped 16.1% to close at USD 57.99 after surging as high as USD 79.38 as it kicked off its first day of trading after completing a reverse merger with a blank check firm.

McCormick jumped 10.52% as the best performer on the S&P 500 after the spice maker beat market expectations for first-quarter sales and profit.

Seagate Technology climbed 7.38% after Morgan Stanley upgraded the computer hard-drive maker’s rating to “overweight” from “equal-weight.”

United Parcel Service shares tumbled 8.16%, however, after announcing its 2026 forecast.

Declining issues outnumbered advancers by a 1.24-to-1 ratio on the NYSE. On the Nasdaq, declining issues outnumbered advancers by about a 1.34-to-1 ratio.

The S&P 500 posted 33 new 52-week highs and one new low while the Nasdaq recorded 122 new highs and 124 new lows.

Volume on US exchanges was 10.43 billion shares, compared with the 12.23 billion average for the full session over the last 20 trading days.

Trading volumes are expected to be light throughout the week, thinning out further as the holiday approaches.

(Reporting by Chuck Mikolajczak; Editing by Richard Chang)

US yields retreat after strong Treasury auction

NEW YORK, March 26 – Treasury yields retreated slightly on Tuesday after strong demand at an auction of USD 67 billion in five-year notes, as the market awaits key inflation data later this week to gauge when the Federal Reserve may begin cutting interest rates.

Yields rose earlier on Tuesday following the release of a Commerce Department report that showed durable goods orders rebounded last month in another sign of a resilient US economy that boosted growth prospects in the first quarter.

The report suggested US manufacturing could be regaining its footing after it struggled in the wake of the Fed’s aggressive tightening of monetary policy to tame inflation.

The Treasury sold USD 67 billion of five-year notes at a high yield of 4.235%, or about seven-tenths of a basis point less than yields traded at the bidding deadline.

“We’re running up against month-end, and with a holiday on Friday that probably accelerated some of the buying and also probably motivated a little bit more auction buying rather than trying to find some value later on,” said Tom Simons, senior economist at Jefferies in New York.

The two-year Treasury yield, which typically moves in step with interest rate expectations, edged up 0.8 basis points to 4.595, down from the session high of 4.618%.

The yield on 10-year Treasury notes fell 1.5 basis points to 4.238%, after earlier hitting 4.273%.

The market now awaits the release of the personal consumption expenditures price index (PCE) on Friday for potential insight into whether the Fed begins to cut rates in June, which it now gives about a 70% probability, according to CME Group’s FedWatch Tool.

Simons, however, said such scrutiny was overdone.

“I don’t think we’re any closer to knowing when they’re going to do something and I don’t think that the Fed necessarily is any closer to knowing when they’ll do something,” he said.

Gennadiy Goldberg, head of US rates strategy at TD Securities in New York, said such intense focus showed markets still wanted to see a clear sign that inflation is slowing down.

“That’s why yields are moving around. Traders are looking at every single data point, whether it’s crucial or not, to try to assess where rates go next,” he said.

The Treasury is scheduled to auction USD 43 billion of seven-year notes on Wednesday.

The market expects the Fed to cut its benchmark overnight interest rate by 78 basis points – a bit more than three one-quarter-percentage-point cuts – by the end of this year. That is less than half of what markets bet would happen earlier this year, but is now in line with Fed projections.

US central bank policymakers, however, have raised their outlook for the longer-term federal funds rate, which the market will eventually need to take into account.

“Past research and Fed targets suggested 2.5% was about right” for the federal funds rate, said Dec Mullarkey, managing director of investment strategy and asset allocation at SLC Management in Boston.

“But persistent US fiscal deficits and financial conditions that seem less sensitive to Fed rates have led to a rethink. Various research suggests something in the 3%-3.5% may be a better target,” he said.

The gap between yields on two- and 10-year Treasury notes, seen as a recession harbinger when short-term securities yield more than longer ones, narrowed to -36.0 basis points. The gap has been negative, or “inverted,” since July 2022.

The yield on the 30-year Treasury bond slid 2.4 basis points to 4.402%.

The breakeven rate on five-year US Treasury Inflation-Protected Securities (TIPS) was last at 2.438%.

The 10-year TIPS breakeven rate was last at 2.317%, indicating the market sees inflation averaging about 2.3% a year for the next decade.

(Reporting by Herbert Lash; Editing by Nick Zieminski, Tomasz Janowski, and Paul Simao)

Dollar up: yen edges lower after Japanese finance minister comments

NEW YORK, March 26 – The dollar rose on Tuesday as traders waited on a fresh catalyst to give clues on Federal Reserve policy, while the yen slipped after Japan’s finance minister said that he would not rule out any measures to cope with the weakening currency.

Investors are grappling with whether the US central bank will cut interest rates three times this year, as is currently expected if inflation remains elevated and economic growth stays strong.

The dollar index bounced slightly after data on Tuesday showed that orders for long-lasting US manufactured goods increased more than expected in February, while business spending on equipment showed tentative signs of recovery as the economy’s growth prospects in the first quarter remained upbeat.

“The market is intensely searching for signs of cracks in the US economy and they’re hard to find, and durable goods illustrates that again today,” said Adam Button, chief currency analyst at ForexLive in Toronto. “It’s a real wait-and-see market.”

Personal consumption expenditures (PCE) due on Friday is this week’s main economic catalyst. The US core PCE price index is seen rising 0.3% in February, which would keep the annual pace at 2.8%.

Trading volumes on Friday may be light, however, with the US stock and Treasuries markets closed for the Good Friday holiday.

The dollar index gained 0.06% to 104.28, while the euro fell 0.05% to USD 1.0831.

The greenback may come under some pressure this week from month- and quarter-end portfolio rebalancing.

The yen dipped 0.09% to 151.52, reversing earlier gains, as verbal intervention by Japanese officials continued. It has weakened in the past week, despite the Bank of Japan’s (BOJ) ending eight years of negative interest rates.

Traders continue to focus on the still-stark interest rate differentials between Japan and the rest of the world, particularly the United States. A break past 151.94 per dollar, hit in October 2022, would take the Japanese currency to its weakest since 1990.

In 2022, Japanese authorities intervened in currency markets to support the yen.

Japanese Finance Minister Shunichi Suzuki said on Tuesday that “rapid currency moves are undesirable.” That came after Japan’s top currency diplomat Masato Kanda on Monday warned against speculators trying to sell off the yen.

“Dollar/yen is stuck around this 151.50 level. People want to go long/dollar yen because of carry returns, but if it goes to 152 or 153 they may get punished by the currency authorities so they don’t want to try,” said Yusuke Miyairi, currency strategist at Nomura.

The carry trade sees investors borrow in low-yielding currencies to invest in higher-yielding ones.

China’s yuan has also been on traders’ radars since its sudden sharp fall on Friday. It gained slightly in the offshore market to 7.248 per dollar after a firmer-than-expected fix from the People’s Bank of China.

In cryptocurrencies, bitcoin fell 1.28% to USD 70,078.01 It is holding below a record high of USD 73,803.25 reached on March 14.

(Reporting By Karen Brettell; Additional reporting by Rae Wee and Alun John; Editing by Nick Zieminski, William Maclean)

Gold advances as rate cut bets firm ahead of US inflation test

March 26 – Gold prices climbed on Tuesday, as expectations of interest rate cuts by the US Federal Reserve firmed, while investors waited for data due later in the week for underlying inflation trends that will help gauge the timing of these cuts.

Spot gold rose 0.2%, to USD 2,176.59 per ounce, by 02:01 p.m. EDT (1801 GMT), having jumped as much as 1.3% earlier in the session.

US gold futures settled 0.04% higher at USD 2177.2.

“Closer to the summer, you’re going to see gold go higher just with the expectation of rate cuts, unless the Fed changes stance or makes some announcement that they’re taking cuts off the table, which I don’t see them doing at this point,” said Bob Haberkorn, senior market strategist at RJO Futures.

Market focus is on the US Core Personal Consumption Expenditure Price Index data PCE due on Friday.

“If the (PCE) numbers are higher than expected, then gold will probably pull back, but I expect those dips to be brought up fairly quickly,” Haberkorn said.

Market reaction to the data may only be seen next week, on account of the Good Friday holiday.

Gold logged a record high of USD 2,222.39 last week after Fed policymakers indicated they still expected to cut rates by three-quarters of a percentage point by end-2024.

Traders are now seeing a 71% chance of a June rate cut. Lower interest rates boost the appeal of holding non-yielding bullion.

Gold prices also continue to find support from elevated physical demand from Chinese households, where gold’s record rally has not tarnished the buying appetite.

Central bank purchases also sustain their support for gold, with China’s central bank steadily building its gold reserves.

“The motivating factor for their gold purchases is diversification away from the G7 currencies, after these currencies were weaponized in 2022 following the (Russia-)Ukraine war,” said Nitesh Shah, commodity strategist at WisdomTree.

Spot silver fell about 1% to USD 24.44, platinum fell 0.1% to USD 901.73, while palladium lost about 1.1% to USD 994.35.

(Reporting by Anjana Anil in Bengaluru and Polina Devitt in London; Editing by Pooja Desai and Krishna Chandra Eluri)

Oil settles lower as markets weigh Russian supply woes

March 26 – Oil prices settled lower on Tuesday as investors took a more mixed view toward the loss of Russian refinery capacity after recent Ukrainian attacks.

Front-month Brent crude futures due to expire on Thursday settled down 50 cents at USD 86.25 a barrel while US West Texas Intermediate (WTI) crude futures settled down 33 cents, or 0.4%, at USD 81.62.

The more actively traded Brent futures for June settled down 33 cents at USD 85.96.

Oil prices edged lower after Russia’s government ordered companies to cut output in the second quarter to meet a 9 million barrels per day (bpd) target to comply with pledges to the OPEC+ consumer group.

Russia, among the top three global oil producers and one of the largest exporters of oil products, is also contending with a spate of recent attacks on its oil refineries by Ukraine and has mounted its own attacks on Ukrainian energy infrastructure.

Russian oil refining capacity shut down by the attacks has reached 14% of the country’s total capacity, Reuters calculations showed on Tuesday.

“Gasoline is seeing the support of reduced availability to the global market from curtailed Russian exports that has filtered through to the US,” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.

FGE analysts said they expect a structural decline in Russian refinery runs and do not see them regaining 2023 levels even in the second half of this year.

Trading was muted ahead of data that could provide insight into when central banks may begin interest rate cuts, which often boost demand for oil.

The crucial February reading of the Personal Consumption Expenditures price index, the US Federal Reserve’s preferred inflation gauge, is due on Friday, when markets are closed for the Good Friday holiday.

“The Fed promised these cuts but there’s really no guarantee that it will be delivered right away, so the market is trading tentatively,” said Frank Monkam, senior portfolio manager for Antimo LLC.

Meanwhile, a slightly weaker US dollar offered some support to oil prices. A weaker dollar typically makes oil cheaper for oil buyers holding other currencies.

OPEC+ is unlikely to make any oil output policy changes until a full ministerial gathering in June, three OPEC+ sources told Reuters ahead of next week’s gathering of ministers that is not expected to make any policy recommendations.

Rising geopolitical premiums as the Israel-Gaza conflict continues were also set to sustain price levels. Iran-backed Houthi militants on Tuesday said they had mounted six attacks on ships in the Gulf of Aden and the Red Sea over the past 72 hours.

US crude oil and distillate inventories rose last week, while gasoline stockpiles fell, according to market sources citing American Petroleum Institute figures on Tuesday.

Crude stocks rose by 9.3 million barrels in the week ended March 22, the sources said on condition of anonymity. Gasoline inventories fell by 4.4 million barrels, and distillate stocks rose by 531,000 barrels.

Official government data will be published on Wednesday at 10:30 a.m. ET.

(Additional reporting by Noah Browning and Natalie Grover in London, Colleen Howe in Beijing, and Trixie Yap in Singapore; Editing by Jason Neely, David Goodman, and Bill Berkrot)

Dollar dips, yen draws support from Tokyo’s jawboning

SINGAPORE, March 26 – The dollar was on the back foot on Tuesday, owing to profit-taking and pressured in part by a slightly stronger yen as Japanese government officials continued with their jawboning to defend the currency.

Against the greenback, the New Zealand dollar rebounded from a four-month low and last bought USD 0.5999, and likewise for sterling which firmed to USD 1.2636, away from last week’s one-month trough of USD 1.25755.

With a relatively light economic data calendar for the week, the market focus turns to the release of the Federal Reserve’s favoured inflation measure on Friday, which could guide the path of the US interest rate outlook.

The US core personal consumption expenditures (PCE) price index is seen rising 0.3% in February, which would keep the annual pace at 2.8%.

“The Fed Chair has tried to push the market away from aggressive interest rate expectations at the start of this year and he’s always been maintaining the idea that it was going to be a bumpy path,” said Tony Sycamore, a market analyst at IG.

“But a print of 3% (annually) or greater would certainly create a lot of concern that maybe the bumpy path is going to be bumpier than expected.”

A shift in the global rate outlook following a slew of central bank meetings last week had pushed the dollar to a one-month high against its major peers.

While the Fed stuck to its projection of three rate cuts this year, other major central banks similarly signalled that an easing cycle was in play.

“It’s tough for the (dollar) to sustain any weakness with a backdrop in which US growth outstrips growth in the rest of the world,” said Thierry Wizman, global FX and rates strategist at Macquarie. “But it’s even tougher for the (dollar) to weaken when other central banks were sounding more dovish than a dovish Fed.”

Fed officials had on Monday acknowledged an increased sense of caution around the pace of slowdown in inflation in the world’s largest economy.

The dollar index was last 0.02% lower at 104.20, while the euro rose 0.03% to USD 1.0840.

The Aussie steadied at USD 0.6540.

In Japan, the greenback fell 0.04% against the yen to 151.37, facing great resistance near the 152 level due to the threat of intervention from Japanese authorities.

Japanese Finance Minister Shunichi Suzuki on Tuesday said that he would not rule out any measures to cope with the yen’s weakening, echoing a warning from Tokyo’s top currency diplomat the previous day.

The yen has slid more than 1% since the Bank of Japan’s (BOJ) landmark rate hike last week, as traders continue to focus on the still-stark interest rate differentials between Japan and the rest of the world, particularly the United States.

Local authorities have grown increasingly vocal about their discomfort over the currency’s slide, as it nears a multi-decade low that was hit in 2022.

“While they say that the fundamentals don’t justify the price, the market’s telling them something else,” said IG’s Sycamore.

Elsewhere, the offshore yuan rose nearly 0.1% to 7.2487 per dollar, extending its gain from the previous session after the suspected selling of dollars by China’s state-owned banks and a strong official guidance set by the central bank, which propped up the currency in the onshore market.

(Reporting by Rae Wee. Editing by Sam Holmes.)

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