The DXY index is trading around 106.60 at the start of the day as the markets reacted to yesterday’s FOMC meeting minutes and now prepare for key US inflation data being released later this session.
The Fed’s November meeting minutes reflect confidence that inflation is easing and the labour market remains strong, supporting the prospect of gradual interest rate cuts.
With a unanimous decision for a 25 bps cut at the last meeting, bringing the target range to 4.5%-4.75%, the committee is looking to reach its 2% inflation goals while maintaining high employment.
Markets expect another Fed cut again in December, although conviction has waned among concerns that Trump tariffs could stoke higher inflation.
US data reports have been pushed forward to accommodate this week’s US Thanksgiving holiday. Key data today will include US PCE, GDP (3Q), Durable Goods Orders, and Initial Jobless Claims. Annualised core PCE inflation data is forecasted at 2.8%, from the previous 2.7%. 3rd quarter GDP growth is expected to remain the same at 2.8%. Durable Goods Orders are expected at 0.5% compared to -0.7% prior. Initial Jobless Claims is surveyed at 215K compared to 213K prior.
EURUSD remains below 1.05 as the pair moves sideways in a narrow channel ahead of US macroeconomic data.
US PCE and GDP (Q3) data are today’s main data points that could move the pair, with Eurozone HICP data coming out later on Friday.
GBPUSD trades below 1.26 during this morning’s session as the pair is supported by recent US dollar weakness and cautious trading ahead of US data releases later today.
After reaching a six-month low of 1.2487 late last week, the pair has recovered slightly to the 1.25 region, moving choppily as market makers await policymaker meetings in December.
There are a number of UK financial activity figures being released on Friday, but the data is mostly low-tier and will have limited impact. This leaves US data responsible for further cable movement this week.
World News
The Reserve Bank of New Zealand announced another 50bps cut, reducing the Official Cash Rate from 4.75% to 4.25%. As a widely expected move by the RBNZ, there are expectations for further cuts as they look to reach a neutral rate somewhere between 2.5% to 3.5%.