US Dollar Steadies Ahead of PCE Data; Euro Drifts Higher
Dollar Index Trades Lower
The U.S. dollar remained steady in early European trade on Monday, with the Dollar Index trading marginally lower at 103.832. Despite a bounce from last week’s low of 103.43, the greenback stayed elevated as markets awaited key inflation data.
Key Inflation Gauge Awaited
The dollar saw its first weekly loss in 2024 but stayed close to three-month highs as Federal Reserve officials reiterated a cautious approach to rate cuts. The focus this week is on the PCE data, the Fed’s preferred inflation gauge, expected to show a 0.4% increase on a monthly basis.
Eurozone Inflation Concerns
The euro edged 0.2% higher at 1.0835 ahead of the Eurozone inflation data release. Economists anticipate a drop in the annual reading to 2.5% for February, moving back towards the ECB’s 2% target after a spike in 2022.
Sterling’s Performance and BOE Outlook
Sterling traded 0.1% lower at 1.2672, impacted by a decrease in U.K. consumer confidence. The Bank of England’s medium-term target of 2% inflation continues to be surpassed, indicating a delay in rate cuts compared to other central banks.
Japanese CPI Data and Yen Movement
The yen traded 0.1% higher at 150.59, remaining close to three-month lows. Focus is on Japanese CPI data for January, which is expected to align with the Bank of Japan’s 2% target range, influencing the central bank’s policy decisions.
Chinese Market Sentiment and Yuan Performance
Sentiment towards Chinese markets remains uncertain, with the yuan trading at a three-month low. Purchasing managers index data for February will provide insights into China’s economic recovery, impacting the yuan’s movement.
