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In Asia on Monday, the euro broke a three-day losing streak against the U.S. dollar and was trading around 1.1050. EUR/USD’s gains can be attributed to the dovish bias of the Federal Reserve, which has led to mild dollar volatility. However, the US PCE price index in July may have provided support for the US dollar, limiting the upside of EUR/USD.
Last Friday, the Bureau of Economic Analysis released a report saying that the annual rate of the U.S. PCE price index in July was 2.5%, which was the same as the previous value of 2.5%, but lower than the expected 2.6%. Meanwhile, the core PCE price index, which excludes volatile food and energy prices, rose at an annualized rate of 2.6% in July, unchanged from the previous reading of 2.6% but slightly below expectations of 2.7%.
The CME Group’s FedWatch tool shows that the market fully expects the Fed to cut interest rates by at least 25 basis points at its September meeting. Atlanta Fed President Raphael Bostic, a well-known hawk on the Federal Reserve’s Monetary Policy Committee (FOMC), said last week that as inflation cools further and the unemployment rate Higher than expected, now may be the time to “take action” with a rate cut. FXStreet’s FedTracker, which uses a customized artificial intelligence model to measure Fed officials’ speech tendencies on a 0 to 10 dovish to hawkish scale, rated Kashkari’s speech neutral, with a score of 5.6. .
According to Bloomberg, European Central Bank (ECB) Governing Council member Francois Villeroy de Galhau said on Friday that the central bank has “strong grounds” to consider lowering its key key in September. interest rate. Galhau recommended action at the upcoming meeting on September 12, noting that a decision on a new round of interest rate cuts is both reasonable and prudent.
