PCE slips lower. The US dollar also declines on rate pause views. Although the USD weakens, price movement is currently mild.
PCE data showed decreased inflationary pressures
According to the most recent statistics from the Bureau of Economic Analysis. Inflation in the US is decreasing. The PCE price indicator decreased to 5.0% from a revised 5.3% in January. While Core PCE (ex-energy and food) decreased to 4.6% in February from 4.7% in January. The Federal Reserve prefers the BEA PCE statistics as its preferred inflation indicator.
PCE data release nudges the US dollar lower
Risk markets received a slight bid before the US opening bell, while the US dollar declined following the publication. The Fed will be satisfied with today’s report as they battle persistently high inflation. That may even allow them to hold off on raising interest rates. The probability of one more 25 bp rate increase before the central bank takes a break is presently close to 50% in the market. The Fed then appears to be lowering rates as Q3 and Q4 come to a close.
Following the news, the US dollar indicator (DXY) lost about 15 pip. And now sits just half a point above last Thursday’s multi-week bottom (101.50).
PCE data statistics
S&P 500 expected to have a positive quarter despite weaker expectations for Fed policy
According to the Fedwatch tool from CME Group (NASDAQ: CME), traders are betting on a 25-basis-point rate increase in May. With rate cuts also anticipated this year.
Susan Collins, president of the Boston Fed, observed that it was too soon for the bank to decide if its rate increases went sufficiently high to return inflation to the Fed’s 2% goal.
Major growth companies like Apple Inc. (NASDAQ: AAPL), Meta Platforms, and Amazon.com (NASDAQ: AMZN). Tesla (NASDAQ: TSLA) gained across 0.5% and 4% on Friday. As U.S. 10-year Treasury yields fell as a result of the inflation statistics.
