The United States Dollar gained slightly overnight but leveled off to start the morning’s trading session after reports showed US personal spending slowed in February and a core inflation gauge rose less than expected.
Overview
Regardless, traders are still currently pricing in a 62% chance of a 25-basis point hike at the Federal Reserve’s next meeting, giving the Buck a bit of relative strength. It is clear that tackling inflation is taking precedence over ongoing instability in the US financial sector for the Fed, and this morning’s PCE reading was a welcome sign that pressures might be easing.Looking ahead, traders will be watching any Fed speakers for signals on the central bank’s planned tightening cycle. Currently, markets expect the Fed will wrap up quantitative tightening after May’s meeting and see the potential for easing toward the end of the year. Interest rate differentials in the G10 will drive USD price action in the medium and long term.
What to Watch Today…
- No major economic events are scheduled for today
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EUR ⇓
The single currency lost a bit of ground against the greenback overnight after touching its strongest rate since February 1st yesterday. Inflation data from a few Eurozone countries released yesterday morning showed that while still quite high, price pressures may be easing slightly. The European Central Bank, however, is still expected to hike 50 basis points at the end of April.
JPY ⇓
Japanese Yen posted a loss against the Buck overnight and into the morning as traders have decided that the US financial sector crisis is all but over. The traditional haven currency is trading lower on improving global risk sentiment, and as Japan wraps up its fiscal year today, real-money flows are dominating markets.
