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US dollar rallies as PCE price index impresses

currency-newsUS dollar rallies as PCE price index impresses
The US dollar closed last week on a positive note, following the publication of a hotter-than-expected PCE price index.

Meanwhile, the pound is mixed at the start of today’s session, with GBP/EUR edging up to €1.1925 and GBP/USD climbing towards $1.2203. GBP/CAD has softened to C$1.5598, while GBP/AUD and GBP/NZD have fallen sharply to A$1.7383 and N$1.9318, respectively.

Looking ahead, the US dollar could stumble at the start of this week’s session as the latest US PMI figures are expected to report a slowing of factory sector activity.

What’s been happening?

The US dollar trended higher on Friday as the core PCE price index, the Federal Reserve’s preferred measure of inflation, beat expectations in June as it ticked up from 4.7% to 4.8%.

However, strength in the ‘greenback’ tapered off by the end of the session in response to falling US Treasury yields.

The euro, meanwhile, firmed on the back of some upbeat data releases. The Eurozone’s latest GDP and inflation figures both outpacing expectations.

At the same time, the pound traded sideways at the end of last week. While Sterling attracted some support as a result of a prevailing risk-on mood, these gains were capped by ongoing UK political uncertainty.

What’s coming up?

Kicking off this week’s session was the publication of Germany’s latest retail sales figures, with the euro facing some pressure as they revealed an unexpected contraction in June.

This downtrend in the single currency may be extended later this morning as the latest eurozone PMI release is expected to confirm growth in the bloc’s manufacturing sector contracted last month.

Meanwhile, movement in the pound may be subdued at the start of this week, with GBP investors likely to resist making any aggressive bets ahead of the Bank of England’s (BoE) upcoming interest rate decision.

For USD investors the spotlight today will be on the latest ISM manufacturing PMI. Will a slowdown in US factory sector growth limit demand for the US dollar this afternoon?
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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