Anna 
The U.S. dollar edged lower on Friday as investors awaited the release of pivotal U.S. inflation figures, which could influence market sentiment ahead of the upcoming Federal Reserve meeting.
At 04:55 ET (08:55 GMT), the Dollar Index, tracking the dollar against a basket of six major currencies, was down 0.1% at 105.395, retreating from Thursday’s peak of 106.00.
Market Focus on PCE Data
Thursday’s data revealed that U.S. gross domestic product (GDP) expanded at a 1.6% annualized rate in the first quarter of 2024, below the expected 2.4% rate.
However, underlying inflation, as measured by the core personal consumption expenditures (PCE) price index, climbed 3.7% in the same period, surpassing expectations for a 3.4% increase.
Federal Reserve officials have consistently expressed concerns about inflation in recent weeks, leading to a reduction in expectations for an early interest rate adjustment.
Investor attention is now fixed on the upcoming release of the PCE price index data for March, widely regarded as the Fed’s primary inflation gauge.
Market Analysis
“The main drivers of FX all point to a stronger dollar: higher Treasury yields, widening swap differentials in favor of the dollar, and falling equities,” noted analysts at ING in a recent report.
“There is a good chance that markets will scale back US rate cuts further if core PCE comes in at 0.4% month-on-month today.”
