Currency market calm as US inflation data holds focus this week

By Brigid Riley

TOKYO (Reuters) - Major currencies were steady on Monday with the dollar consolidating against peers, as market participants awaited U.S. inflation data to assess the prospects of interest rate cuts this year.

After a softer-than-expected U.S. payrolls report for April and a Federal Reserve policy announcement, expectations have increased for rate reductions this year.

Markets have priced in a 61.2% chance of some degree of rate reductions to begin at the Fed's September meeting, with about 50 basis points of cuts in total expected, CME's FedWatch Tool showed.

But comments by Fed officials last week were varied as speakers debated whether interest rates were high enough. A jump in consumers' inflation expectations, revealed in a survey on Friday, could further complicate the conversation.