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Dollar mixed as markets seek assurance of fed’s cautious move

EARLY Monday, the US dollar was neutral versus its major trading partners ahead of a light data calendar that included the release of the May Empire State index, the month’s first manufacturing reading.

Markets want further certainty that the Fed will tread carefully in its fight against inflation rather than imposing hefty 75-basis-point rate hikes.

USD-JPY increased to 129.45 from 129.194 at the Friday US close and 128.8902 at the same time Friday morning, according to a short review of foreign exchange activities heading into Monday.

According to data released yesterday, Japanese producer prices increased at an all-time high in April.

Despite rising inflation, the Bank of Japan is firmly focused on promoting growth. As a result, in contrast to other major economies, the Bank of Japan is projected to keep interest rates low for a long time.

The USD-CAD exchange rate rose to 1.2923 from 1.2906 at the US close on Friday, but was down somewhat from 1.3001 at the same time on Friday morning. At its next meeting on June 1, the Bank of Canada is likely to raise rates by 50 basis points, with the possibility of a greater hike.

The EUR/USD exchange increased to 1.0423 from 1.0408 at Friday’s US closing and 1.0386 on Friday morning. According to data released earlier Monday, the Eurozone’s trade imbalance was higher in March than it was in April.

Following the anticipation of no change at the June ECB meeting, comments from European Central Bank officials suggest that a rate hike could occur in July. The GBP/USD exchange rate remained practically constant at 1.2261, up from 1.2207 at the same time Friday morning.

There are no UK data releases scheduled for Monday. The Bank of England will meet again on June 16, when another rate hike of 25 basis points is predicted.

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