The dollar held steady on Monday, but was set for its first monthly loss this year, as investors were focused on U.S., European and Japanese inflation data to guide the global interest rate outlook.

Foreign exchange trade has been dominated by the hunt for “carry” in recent months, punishing low-yield currencies and supporting the dollar, while U.S. data has blown hot and cold and dented policymakers’ confidence on the rates outlook.

Several major pairs have hugged tight ranges. The euro , which gained 0.9% on the dollar last week, was in the middle of a range it has held for more than a year at $1.085.

The euro offered little reaction to a survey on Monday that showed German business confidence worsened in May, against forecasts for an improvement.

Trading on Monday was thinned out by holidays in Britain and the United States.
German inflation data on Wednesday and euro zone readings on Friday will be watched for confirmation of a European rate cut that traders have pencilled in for next week.

Sterling was testing the top side of a range it has held this year at $1.2735.
Friday’s reading for the U.S. core personal consumption expenditures price index, the Federal Reserve’s preferred inflation measure, is expected to be steady month-on-month.

The dollar had fallen back after data showed a slowdown in consumer price rises in April and confirming the trend could pull it lower still – but the big picture is that inflation and inflation indicators remain above the Fed’s 2% target.

The video player is currently playing an ad. The dollar index , which measures the performance of the U.S. currency against six others, was last down modestly at 104.71. It is on track for a drop of 1.5% in May, the most in one month since December. “A 25-bp (basis point U.S. interest rate) cut in September is priced at a 50/50 proposition, with a total of 57 bps of cuts priced by December – so we’d need a big surprise to change that pricing,” Pepperstone strategist Christ Weston said. “U.S. core PCE above 3% could do the trick, and that would get the dollar humming along, while a print below 2.7% could see relief resonate through markets,” he said.
CARRY ON

While the rates uncertainty persists, investors have been chasing income and selling low yield currencies such as the yen, yuan and Swiss franc against the euro and the dollar.

The Swiss franc has been falling all year and at 0.9928 francs per euro touched the lowest since April 2023 last week .

The yen may seal its first monthly gain of the year this month thanks to suspected intervention from Japanese authorities towards the end of April and at the start of May, but it has been slipping back since then.

It was steady at 156.88 to the dollar on Monday but has won little support from rising Japanese government bond yields – at the 10-year tenor, for example, they remain nearly 350 basis points below U.S. yields .

Tokyo CPI data, due on Friday, is a reliable guide to the national trend and will be closely watched. Finance ministry data on Friday will also reveal the size of Japan’s intervention.

The U.S. move to shorten equity-market settlement from two days to one is another factor to watch in currency trade this week as dealers expect it may drive trade into the quiet early mornings in Asia.

“Asia-based investors will only have a few hours to aggregate funding requirements, process trade-related FX instructions and manage the execution,” said Lloyd Rees, global custody product lead for Asia and the Middle East at BNY Mellon.

In cryptocurrency markets, ether closed out its largest weekly rise in nearly three years after a surprise approval for some U.S. exchange-traded fund (ETF) applications.

Further approvals remain necessary before launch, but the price of the second-biggest cryptocurrency by market value rose 25% against the dollar last week and another 5% to $3,938 in Asia trade on Monday.

With price levels continuing to spike, the Fed is no longer using the word ‘transitory’ to describe inflation.

U.S. consumer prices jumped 8.6% in May from a year ago, marking the fastest increase since December 1981. That could give the Fed more reason to continue raising interest rates — something that’s already casting a giant shadow over the stock market.

It’s a vicious cycle criticized by many investing veterans. And Rich Dad, Poor Dad author Robert Kiyosaki is one of the latest experts to sound the alarm.

“When inflation goes up, we’re going to wipe out 50% of the U.S. population,” he told Stansberry Research earlier this year.

Let’s take a closer look at what Kiyosaki means by that.

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Consumer crunched
Kiyosaki isn’t exactly pleased with the current state of the U.S. economy.

“America has stopped producing products, we produce bubbles,” he says, adding that we now have bubbles in the real estate market, the stock market, and the bond market.

The author also criticizes President Joe Biden’s decision to halt the Keystone XL oil pipeline, which he believes is a major reason energy prices are so high.

And that does not bode well for the average Joe.

“The average American doesn’t have 1,000 bucks,” Kiyosaki says. A recent Bankrate survey showed that most Americans do not have enough money set aside to cover an unexpected $1,000 expense.

It also spells trouble for those who want to enjoy their golden years. When the bubbles burst, Kiyosaki says, the stock market will crash. So those relying on their 401(k) plans “are toast.”

“We don’t have a retirement, our pensions are bust.”

Time to protect yourself
Given his grim outlook, it’s no big surprise that Kiyosaki is a fan of safe haven assets like gold and silver. Precious metals can’t be printed out of thin air like fiat money, and they’ve been helping investors preserve their purchasing power for centuries.

Robert Kiyosaki says that hot inflation will ‘wipe out 50% of the US population’ — here’s what he means by that and how to protect yourself (yahoo.com)