US Core PCE Preview: Elevated Data May Lift the USD, says Scotiabank
The US dollar could see gains ahead of the release of the Core PCE data later this week, according to Scotiabank. The Core PCE data is a measure of inflation and is closely watched by the Federal Reserve as they consider monetary policy decisions. The report is expected to show elevated levels of inflation, which could support the USD.
Scotiabank notes that market expectations are for a 0.3% month-on-month increase in the Core PCE price index, which would be the third consecutive monthly increase at that level. The bank believes that if the data comes in higher than expected, it could further fuel inflation concerns and result in a stronger USD.
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However, the bank also cautions that the market’s reaction could be limited if the data meets expectations, as elevated inflation has already been priced into the market. Additionally, other factors, such as the ongoing pandemic and geopolitical tensions, could still influence the direction of the USD.
Overall, Scotiabank advises investors to keep a close eye on the Core PCE data release and to consider its potential impact on the USD. They suggest that a stronger-than-expected reading could support the USD in the short term, but investors should also be mindful of broader market factors that could impact the currency’s direction.
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