Dollar holds gains ahead of US inflation test
dollar steadied on Thursday as it nursed some of its steep losses from previous sessions, with traders looking ahead to a key U.S. inflation reading at the end of the week that could offer further clues on the outlook for rates there.
Friday's release of the core personal consumption expenditures (PCE) price index — the Federal Reserve's preferred measure of inflation — headlines a week that's otherwise been lacking on major market moving data, leaving currencies mostly rangebound.
Still, the dollar held to its overnight gains in early Asia trade on Thursday, after having risen 0.48% against a basket of major peers in the previous session. Analysts also attributed the rise to month-end demand.
The euro was off its 13-month high and last bought $1.1130. Sterling rose 0.08% to $1.3201, but was some distance away from Tuesday's peak of $1.3269, its strongest level since March 2022.
The Australian dollar eased away from an eight-month top and last stood at $0.6793.
«PCE is definitely this week's most important print in the U.S., but I doubt it will materially move market expectations for FOMC policy unless there is a significant miss,» said Carol Kong, a currency strategist at Commonwealth Bank of Australia.
Markets have fully priced in a 25-basis-point rate cut from the Fed next month, with a 34.5% chance of an outsized 50bp reduction, according to the CME FedWatch tool.
Investor bets for imminent U.S. rate cuts were further cemented by Fed Chair Jerome Powell's remarks at Jackson Hole last week that the «time
