Americas Forex News Roundup: Dollar Near Year Highs as PCE Inflation Soars
Friday's PCE inflation data did nothing to alleviate concerns about increasing prices, as all of the report's primary statistics ran hot except for income. The market reaction was similar to what we've seen recently: the US dollar gain.
The Market Trends:
- S&P 500 is down 44 points to 3975
- US 10-year yields are up 6.6 bps to 3.95%
- WTI crude oil is up $1.19 to $76.58
- Gold is down $11 to $1811
- USD leads, JPY lags
The data helped the dollar break past several resistance levels, allowing it to reach year highs on most fronts (with GBP as a notable exception). The AUD/USD broke through the 200-day moving average and plummeted to 0.6726, close to the day's lows and the lowest level since early January.
USD/JPY has continued to strengthen and has about closed the December gap left by the BOJ surprise. It's worth noting that, despite the stock market's meltdown, the yen was the weakest performer today. That suggests the market is pricing in stronger global growth and higher rates everywhere. That's a subject to keep an eye on when the calendar turns.
EUR/USD declined for the fourth day in a row, closing down on the early-January low of 1.0479. The dollar is benefiting from the speculation of increased Fed interest rates. The futures market predicted 5.41%, implying a good possibility of 5.50-5.75% this year, while US 2s touched 4.81%, the highest closing since 2007 and an intriguing risk-free parking space for the next two years.
The dollar didn't completely lose, though, as USD/CAD slipped 60 pips from its highs as oil prices rose to close the week unaltered. We've reached the moment where commodities and other growth-sensitive assets must decide whether to rejoice in a brighter near-term outlook or fear increased central bank rates and a likely recession in 2024.