The dollar stabilised against a basket of major currencies in the early session, after pulling back below the key level of 105 on the previous trading day.
The greenback was affected by yesterday’s downward revision of Q1 GDP growth in the US, revealing a slower economic expansion at a 1.3% annualised rate. However, expectations continue to point to an interest rate cut in November.
The dollar could remain volatile as it reacts to the changes in US Treasury yields, which retreated to a certain extent after the GDP data release.
Attention now turns towards the Personal Consumption Expenditures (PCE) price index scheduled for release later today.
The market awaits this key inflation data for further clues on how the central bank might adjust its policies. The Core PCE price index is expected to remain unchanged for the third consecutive month at 0.3% MoM, after January’s spike to 0.5%. The dollar as well as treasury yields could come under pressure if the Core PCE reveals a decline below market consensus.
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