The US dollar started the week with subdued movements and low trading volumes today due to a bank holiday in the UK and Memorial day in the US.
Last week, the greenback strengthened slightly on the back of strong US economic data, as traders reduced their bets on near-term Federal Reserve interest rate cuts.
The latest Fed minutes revealed that some officials remain prepared to tighten policy further if inflation rises again, leading markets to push back expectations for the start of the easing cycle to November.
The market is awaiting a slew of key economic data this week. US GDP data will be released on Thursday, while the awaited inflation indicator, the US Personal Consumption Expenditures (PCE) price index report, will be released on Friday.
The core PCE Index is expected to remain unchanged. Core PCE prices in the US have not changed since February. However, the PCE figures have decreased since January’s reading. The dollar could pull back if the core PCE index decreases below market consensus. However, the greenback has benefited from the sell-off of low-yield currencies like the yen, yuan, and the Swiss franc, reflecting current interest rate disparities.
At the same time, treasury yields could continue to see some risks as trader’s sentiment continues to change
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