The currency market started the week cautiously, with the dollar slightly lower on Monday after data last week showed US inflation had stabilised in April, keeping the door open for the Federal Reserve to cut interest rates later in the year.
Traders are now pricing in about a 53 per cent chance of a rate cut in September, versus about 49 per cent before the report.The inflation data still shows price pressures remain above the Fed’s 2 per cent target, with the year-over-year rise in the PCE index measuring 2.7 per cent in April, the same rate as in March, keeping the markets unsure of more than one rate cut in 2024.
Sterling was 0.04 per cent higher at US$1.27475, while the euro last fetched US$1.085325 ahead of the European Central Bank policy meeting on Thursday when the central bank is seen as almost certain to cut rates.