The US dollar faces a decline amidst speculations on Fed actions. The USD Index experienced slight losses, hovering around 103.200, indicating a decrease of nearly 0.150%. The vulnerability of the Greenback can be attributed to speculations surrounding the future actions of the Federal Reserve. All eyes are now focused on Thursday’s release of the Personal Consumption Expenditures (PCE) figures.
This, however, serves as the Fed’s preferred inflation indicator. Despite mixed housing market data on Monday, including reports on New Home Sales and Building Permits, the dynamics of the USD remained unaffected. The weakening of the US dollar can be attributed to expectations of a dovish Federal Reserve. This is evident amidst a cooling labor market and inflation in the United States. Investors are eagerly awaiting crucial indicators leading up to the December meeting.
This meeting includes the October PCE figures, an additional jobs report, and the November Consumer Price Index (CPI). These releases are expected to significantly influence the trajectory of the USD in the coming weeks.
PCE Inflation Influences USD
In terms of market movements, the US dollar is currently navigating within a neutral range. It is influenced by the anticipation of October’s PCE inflation figures and the prevailing dovish sentiments regarding the Fed. Notably, October witnessed a decline in New Home sales, falling short of the expected 725K with an actual figure of 679K.
However, there was a positive note in Building Permits, exceeding both previous and predicted numbers at 1.4 million. At the beginning of the week, US bond yields experienced a downturn. This shift is currently limiting the USD’s progress. According to the CME FedWatch Tool, market expectations lean towards no rate hike at the December meeting.
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