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TOKYO: The dollar traded on the back foot on Tuesday, as markets looked ahead to a week of US economic data that will provide fresh signals on how soon the Federal Reserve may begin cutting interest rates.

Leading cryptocurrency bitcoin soared to a more than two-year high above $57,000 after enterprise software firm MicroStrategy Inc announced it had bought about 3,000 more of the tokens for $155 million.

The US dollar index, which measures the currency against a basket of peers including the euro and yen, traded flat at 103.77 in Asian time, following a 0.17% slide on Monday.

Markets have all but ruled out a cut at the Fed’s March meeting and have recently pushed back expectations for a cut to June from May, CME’s FedWatch Tool showed, following strong US consumer and producer price data.

US durable goods data is due later on Tuesday, while January’s US personal consumption expenditures price index, which is the Fed’s preferred measure of inflation, will be released on Thursday.

“A still softish DXY (dollar index) doesn’t quite convey the USD’s story right here and, if anything, key upcoming event risk can potentially fuel another leg up,” Westpac’s head of FX strategy, Richard Franulovich, wrote in a note.

“The bulk of DXY’s gains this year have unfolded over just a handful of marquee sessions, and outside that it has been decidedly consolidative,” he said.

“The lacklustre DXY in recent days looks mostly like a continuation of that profile.”

The dollar slipped 0.13% to 150.485 yen, as Japan’s currency firmed following the release of figures showing consumer inflation stayed at the Bank of Japan’s 2% target, rather than dipping below it for the first time in nearly two years, as economists had forecast.

Dollar firms ahead of busy data week with US inflation in focus

The euro was unchanged at $1.08505, following a 0.27% advance in the previous session.

Bitcoin was last 3.3% higher at $56,338, after earlier jumping to $57,055 for the first time since December of 2021.

Risk-sensitive antipodean currencies sank amid a slide in regional equities, continuing a retreat from multi-week peaks.

The Australian dollar lost 0.2% to $0.6528, after reaching a three-week high of $0.6595 on Thursday.

The kiwi eased 0.3% to $0.61555, after touching the highest since Jan. 15 at $0.6218 on Thursday. Traders are gearing up for what could turn out to be a significant policy meeting by the Reserve Bank of New Zealand (RBNZ) on Wednesday.

Markets are pricing in a one-in-three chance the RBNZ will raise its 5.5% official cash rate to combat stubborn inflation.

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