US dollar firms as US personal spending accelerates

The US dollar drifted higher against the majority of its peers on Friday following the publication of the latest US personal spending figures.

Trade in Sterling is mostly flat this morning, with GBP/EUR muted at €1.1866, while GBP/USD holds steady at $1.3132. GBP/CAD and GBP/AUD are also rangebound, trading at CA$1.7722 and AU$1.9376 respectively, while GBP/NZD firms to NZ$2.1089.

Looking ahead, the pound and euro could experience volatility later this morning following the publication of both the Eurozone’s and the UK’s finalised manufacturing PMIs.

What’s been happening?

The US dollar strengthened against the majority of its peers on Friday following the publication of the latest US personal spendings.

The rise in consumer spending helped to offset the latest core PCE price index, which remained unchanged at 2.6% in July, missing forecasts it would rise to 2.7%.

The rise in personal spending dampened bets for a 50 basis-point interest rate cut from the Federal Reserve next month, lifting the ‘greenback’ at the end of last week.

Turning to the euro, the single currency dipped against the majority of its counterparts on Friday following the publication of the Eurozone’s latest consumer price index.

The data reported a decline in both the bloc’s headline and core inflation rates, with headline inflation slowing from 2.6% to 2.2%, moving closer towards the European Central Bank’s (ECB) 2% target.

Turning to the pound, the currency was able to hold its ground on Friday despite a continued lull in domestic data, as Sterling was supported by a cautiously optimistic market mood.

What’s coming up?

Turning to today, the euro could experience fresh selling pressure following the publication of the Eurozone’s finalised manufacturing PMI for August.

As the index remained in contraction territory with a reading of 45.8. This could stymie the single currency as this confirms activity in the bloc’s factory sector remained at an eight-month low.

Similarly, the UK will also release its finalised manufacturing PMI for the same time period, which is expected to print at a two-year high of 52.5.

Should the data print as expected, the pound could begin the week firming against its peers.

Turning to the US dollar, domestic releases are absent from today’s data calendar as US markets close for Labor Day, which will likely see the ‘greenback’ trade without a clear direction.