Dollar stabilizes at low levels; PCE data could determine future direction
Investing.com — The U.S. dollar stabilized in early European trade Wednesday, remaining near a three-month low amid growing expectations that the Federal Reserve has completed its series of rate hikes and could begin cutting rates early next year.
At 03:20 ET (07:20 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded largely flat at 102.652, trading around its lowest level since early August.
The dollar retreated further late Tuesday after Fed Governor Christopher Waller, widely seen as a hawkish voice at the central bank, flagged the possibility of a rate cut in the months ahead.
«I am increasingly confident that policy is currently well positioned to slow the economy and get inflation back to 2%,» he said during a speech at the American Enterprise Institute think tank on Tuesday.
If the decline in inflation continues «for several more months… three months, four months, five months… we could start lowering the policy rate just because inflation is lower,» he added.
The Fed’s preferred inflation gauge, the personal consumption expenditures price index, is due on Thursday, and is expected to have risen 0.1% in November, a cooling 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 rose 0.1% to 1.0994, having earlier traded above 1.10 to an over three-month high of 1.1018.
The latest EU inflation data is due for release on Thursday, and is expected to show an easing of pressures, especially after Germany’s most populous state, North Rhine Westphalia,
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