The U.S. dollar held steady as traders focused on U.S. inflation data

(1) The U.S. dollar held steady in cautious trading on Wednesday, and the U.S. inflation data will be released later this week, which may affect the Fed's policy; (2) In the foreign exchange market, the dollar is still leading, and the dollar index is last at 102.51 after rising 0.215% on Tuesday, basically flat. (3) The U.S. dollar index rose 1% for the month and fell 2% in December as traders reassessed the magnitude and timing of the Fed's rate cuts. (4) The Fed was unexpectedly dovish in December, expecting a 75 basis point rate cut in 2024, which spurred market expectations for easing, with traders expecting a rate cut of up to 160 basis points last month. (5) Since then, the market has reassessed this possibility and now expects a cumulative 140 basis point rate cut this year. (6) Traders are eyeing the U.S. Consumer Price Index (CPI) report, which will be released on Thursday, to help them forecast the likelihood of a rate cut in March. The report is expected to show that headline prices rise 0.2% month-on-month in December and rise 3.2% year-on-year. (7) According to CME Group's (CME) FedWatch tool, the federal funds Intrerest Rate futures market is pricing in a 64% chance of a Fed rate cut in March, down from 70% a week ago. (8) Joseph Capurso, head of international and sustainable economics at the Commonwealth Bank of Australia (CBA), said that May is more likely to be the start of the US interest rate cut cycle as the labour market is currently tight and inflation remains above the Fed's 2% target. (9) He said a reassessment of the expected start time of the rate-cutting cycle could provide support to the dollar in the coming months