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Dollar Loses Ground After PCE Data


The U.S. dollar shed ground against most of its major counterparts on Friday after data on personal consumption expenditure indicated a slowdown in U.S. inflation.

The data has helped ease concerns about the outlook for interest rates, and raised hopes the Fed will end its tightening cycle soon.

Data released by the Commerce Department showed personal income rose by 0.3% in June after climbing by an upwardly revised 0.5% in May. Economists had expected personal income to increase by 0.5% compared to the 0.4% advance originally reported for the previous month.

Meanwhile, personal spending climbed by 0.5% in June after inching up by an upwardly revised 0.2% in May. Economists had expected personal spending to rise by 0.4% compared to the 0.1% uptick originally reported for the previous month.

Core PCE prices, which exclude food and energy, went up by 0.2% month-over-month in June 2023, easing from a 0.3% increase in May. The annual rate, the Federal Reserve’s preferred gauge to measure inflation, rose by 4.1%, the lowest since September 2021.

Traders also noted the Bank of Japan’s unexpected move to tweak its monetary policy framework to allow long-term yields to move 0.5% in both directions.

The dollar index, which was up at 102.04 in the Asian session, dropped to 101.36 after the release of the PCE data, and despite recovering to 101.65, remains below the flat line.

Against the Euro, the dollar has weakened to 1.1021 from 1.0980, and trading at 1.2853 against Pound Sterling, losing nearly 0.5%.

The dollar is stronger against the Japanese currency, fetching 141.16 yen a unit, compared to 139.49 yen Thursday evening.

Against the Aussie, the dollar is up at 0.6648. The Swiss franc is weak at CHF 0.8701 against the dollar, while the loonie is down against the dollar at C$1.3239.

The US bond market is on the verge of a major breakdown – and that will send mortgage rates to levels unseen since 2000 and fuel more banking trouble, economist says

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