By Daniel Takieddine, Co-founder and CEO, Sky Links Capital Group
The US dollar held steady on Friday as investors awaited the release of the Federal Reserve’s preferred inflation gauge, the PCE price index, alongside personal spending and income data. Consensus expects core prices to rise 0.2% in August, slowing from July’s 0.3% pace, while personal spending is seen holding at 0.5% and income growth easing to 0.3%.
The upcoming data are pivotal in shaping expectations for the Fed’s policy path after a week of cautious tone from Jerome Powell and resilient economic data. Stronger GDP, durable goods, and jobless claims yesterday questioned the urgency of aggressive easing, prompting markets to scale back the probability of multiple cuts this year and the next. Still, an interest rate reduction in October remains very likely.
Treasury yields were little changed, with the 10-year holding near 4.18%, its highest level in three weeks. Both yields and the dollar could see renewed volatility if today’s figures diverge meaningfully from expectations.