The US dollar could face downward pressure later this week if the US core PCE deflator moderates, China’s PMIs show improvement, or euro-zone inflation re-accelerates due to statistical quirks.
Traders are gearing up for a week packed with inflation data from Australia, Japan, the eurozone, and the US. The Federal Reserve’s preferred inflation gauge, the core Personal Consumption Expenditures (PCE) deflator, is anticipated to show modest relief when released on Friday. Fed Chair Jerome Powell has emphasized the necessity for more substantial evidence that inflation is moving towards the 2% target before considering policy easing. Key speeches from US central bankers, including John Williams, Lisa Cook, Neel Kashkari, and Lorie Logan, will be closely watched for further insights.
In the commodities market, gold prices steadied. Oil prices advanced with traders focusing on the upcoming OPEC+ supply meeting on Sunday and US demand at the onset of the summer driving season. Oil prices held steady after two days of gains, despite escalating tensions in the Middle East following the death of an Egyptian soldier in a clash with Israeli troops.
This week’s economic data and central bank commentary will be critical in shaping market expectations and influencing the USD’s trajectory.