- The US dollar is trading slightly higher at around 104.13 early Friday morning in Asia.
- Inflation in the United States, as measured by the core personal consumption expenditures (PCE) price index, slowed down slightly to 2.8% year-over-year in January, compared to 2.9% in December.
- Federal Reserve officials have recently indicated that they plan to start lowering interest rates later this year.
The US Dollar Index (DXY) recovered above the 104.00 level on Friday during early Asian trading hours. This rise stems from speculation that the Federal Reserve (Fed) might delay its anticipated rate cuts due to stubbornly high inflation. Despite market expectations for a summer rate decrease, several Fed officials have emphasized caution, citing the need for further inflation data before making policy changes. The DXY currently sits at 104.13, gaining a slight 0.01% for the day.
While the Personal Consumption Expenditure (PCE) Price Index did show a slight decrease from December to January (2.6% to 2.4% YoY), the core PCE remained slightly elevated at 2.8% YoY compared to 2.9% in December. These figures, in line with market expectations, paint a picture of inflation remaining above the Fed’s target of 2%.
Investors remain vigilant, awaiting key economic data releases on Friday, including the US ISM Manufacturing PMI, Michigan Consumer Sentiment Index, and S&P Global Manufacturing PMI. These indicators, along with upcoming speeches from several Fed officials, could provide clearer direction for the US Dollar Index and offer more insight into the Fed’s potential policy trajectory. The future of the dollar remains somewhat uncertain as the Fed navigates the balancing act between controlling inflation and stimulating economic growth.
Source: https://www.fxstreet.com/