Dollar edges higher, but near monthly lows ahead of PCE inflation
Investing.com — The U.S. dollar edged higher in early European trade Tuesday, but remained near a three-month low as traders awaited key inflation data amid growing conviction that the Federal Reserve has completed its rate-hiking cycle.
At 04:20 ET (09:20 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, rose 0.1% to 103.130, trading just above its lowest level since Aug. 31.
The dollar was on track for a loss of more than 3% in November, its worst monthly performance in a year.
The dollar retreated on Monday after data showed that U.S. new home sales fell 5.6% in October, pointing to a slowdown in the U.S. economy, and supporting bets that the Federal Reserve could start cutting interest rates in the first half of next year after ending its hiking cycle at the start of this month.
However, this theory is likely to be put to the test with the release of another U.S. inflation report on Thursday.
The Fed’s preferred inflation gauge, the personal consumption expenditures price index, is expected to have risen 0.1% in November, a fall from 0.4% in September.
The core reading, which strips out food and fuel costs and is considered a better gauge of underlying inflation, is expected to have risen 3.5% on a year-over-year basis, a drop from 3.7% the prior month, and the lowest since mid-2021.
In Europe, EUR/USD fell 0.1% to 1.0947, but remained near its highest levels since mid-August with consumer confidence data from German and France suggesting a slight improvement.
The latest EU inflation data is due for release later this week, and is expected to show an easing of pressures.
That said, the fight to contain price growth is not yet done, ECB President Christine Lagarde said on
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