The US Dollar (USD) saw renewed buying interest on Friday, rebounding from the previous day’s decline spurred by softer US macroeconomic data. The USD climbed to a fresh two-month high during the Asian session, with the USD Index (DXY), which measures the Greenback against a basket of currencies, rising 0.15% to just above the 106.00 mark. Traders are now focusing on the crucial US inflation data set to be released later today.
The Federal Reserve’s (Fed) preferred inflation measure, the Personal Consumption Expenditure (PCE) Price Index, is scheduled for release at 12:30 GMT during the early North American session. A lower-than-expected PCE deflator, or a figure aligning with market expectations, could support the case for two rate cuts by the Fed this year, potentially weakening the USD. Conversely, any upward surprise in the data could delay the anticipated timing for the first Fed rate cut, potentially boosting the Greenback.
ECONOMIC CALENDAR ON 28/06/24 (myfxbook)
Recent comments from influential Federal Open Market Committee (FOMC) members suggest that the Fed is in no rush to begin cutting rates. Fed Governor Michelle Bowman remarked on Thursday that it is not yet time to consider a rate cut due to persistent upside risks to inflation. Additionally, Atlanta Fed President Raphael Bostic emphasized that inflation remains a primary concern and that the Fed wants to ensure inflation returns to 2% before implementing an initial cut.
These statements overshadowed Thursday’s lackluster US economic data, which indicated a slowdown in growth momentum. Consequently, today’s release of the US PCE data is expected to significantly influence market expectations regarding the Fed’s future policy decisions, and thereby impact the USD’s performance in the near term. Meanwhile, the first US presidential debate between President Joe Biden and Republican Presidential Nominee Donald Trump did not affect the USD, which remains on track to end the week positively for the fourth consecutive week.