Mar 28, 2025
The dollar is anticipating the release of the PCE data, while the pound sterling is set to achieve a quarterly increase.
The U.S. dollar stabilized on Friday before important inflation data that could influence the Federal Reserve's future monetary policy, while the strength of U.K. consumers provided support for the pound.
At 05:10 ET (09:10 GMT), the Dollar Index, which measures the greenback against a basket of six other currencies, rose slightly to 104.037, indicating a marginal weekly gain.
The U.S. currency has been trading relatively steadily this week, but it is on track for a quarterly decline of about 4% due to concerns about the effects of tariffs on U.S. economic activity and inflation.
Attention will soon shift as the U.S. releases February data for the Federal Reserve’s preferred PCE inflation gauge.
The personal consumption expenditures price index for February is expected to mirror the previous month’s 0.3% monthly increase.
Additionally, the so-called “core” measure is anticipated to accelerate slightly on an annual basis and match January’s month-on-month pace.
These figures come amid rising concerns that Trump’s aggressive trade policies could reignite inflationary pressures.
“The announcement of auto tariffs on Wednesday has not given the dollar a significant boost, and we will observe how the dollar performs today with some mildly positive data expected,” analysts at NG noted.
“Currently, the market anticipates 17 basis points of rate cuts in June – a scenario that could change if inflation remains persistent.”
Sterling is on track for a quarterly gain.
In Europe, GBP/USD remained mostly unchanged at 1.2945, trending towards a gain of about 3% in the first quarter, bolstered by British retail sales unexpectedly increasing by 1% in February, exceeding expectations of a 0.4% decline, following a 1.4% rise the previous month.
This growth was supported by stronger demand in department stores and increased spending on clothing and household goods.
Additional data revealed that the British economy grew by a modest 0.1% in the fourth quarter of 2024, aligning with expectations.
EUR/USD saw a 0.2% drop to 1.0780, holding steady despite the announcement of U.S. auto tariffs, and is set for its largest quarterly increase in over a year, attributed to prospects for peace in Ukraine, dollar weakness, and a significant rise in benchmark German yields.
German consumer sentiment remained largely stable as April approached, with the GfK consumer sentiment index rising slightly to -24.5 points from a revised -24.6 points the previous month.
Moreover, French consumer prices increased less than expected in March, with its harmonized rate rising 0.9% year-on-year in March, unchanged from February but below the anticipated average increase of 1.1%.
Yen appreciates following strong CPI release.
In Asia, USD/JPY fell 0.3% to 150.53, with the Japanese yen gaining from data indicating that Tokyo’s consumer price index rose 2.9% year-on-year in March, up from 2.8% the previous month, signifying ongoing inflationary pressures in Japan’s capital.
USD/CNY slipped 0.1% to 7.2616, remaining relatively stable as traders remain cautious, weighing the potential impact of tariffs on regional currencies, which are already strained by recent tariff announcements and escalating global trade tensions.
At 05:10 ET (09:10 GMT), the Dollar Index, which measures the greenback against a basket of six other currencies, rose slightly to 104.037, indicating a marginal weekly gain.
The U.S. currency has been trading relatively steadily this week, but it is on track for a quarterly decline of about 4% due to concerns about the effects of tariffs on U.S. economic activity and inflation.
Attention will soon shift as the U.S. releases February data for the Federal Reserve’s preferred PCE inflation gauge.
The personal consumption expenditures price index for February is expected to mirror the previous month’s 0.3% monthly increase.
Additionally, the so-called “core” measure is anticipated to accelerate slightly on an annual basis and match January’s month-on-month pace.
These figures come amid rising concerns that Trump’s aggressive trade policies could reignite inflationary pressures.
“The announcement of auto tariffs on Wednesday has not given the dollar a significant boost, and we will observe how the dollar performs today with some mildly positive data expected,” analysts at NG noted.
“Currently, the market anticipates 17 basis points of rate cuts in June – a scenario that could change if inflation remains persistent.”
Sterling is on track for a quarterly gain.
In Europe, GBP/USD remained mostly unchanged at 1.2945, trending towards a gain of about 3% in the first quarter, bolstered by British retail sales unexpectedly increasing by 1% in February, exceeding expectations of a 0.4% decline, following a 1.4% rise the previous month.
This growth was supported by stronger demand in department stores and increased spending on clothing and household goods.
Additional data revealed that the British economy grew by a modest 0.1% in the fourth quarter of 2024, aligning with expectations.
EUR/USD saw a 0.2% drop to 1.0780, holding steady despite the announcement of U.S. auto tariffs, and is set for its largest quarterly increase in over a year, attributed to prospects for peace in Ukraine, dollar weakness, and a significant rise in benchmark German yields.
German consumer sentiment remained largely stable as April approached, with the GfK consumer sentiment index rising slightly to -24.5 points from a revised -24.6 points the previous month.
Moreover, French consumer prices increased less than expected in March, with its harmonized rate rising 0.9% year-on-year in March, unchanged from February but below the anticipated average increase of 1.1%.
Yen appreciates following strong CPI release.
In Asia, USD/JPY fell 0.3% to 150.53, with the Japanese yen gaining from data indicating that Tokyo’s consumer price index rose 2.9% year-on-year in March, up from 2.8% the previous month, signifying ongoing inflationary pressures in Japan’s capital.
USD/CNY slipped 0.1% to 7.2616, remaining relatively stable as traders remain cautious, weighing the potential impact of tariffs on regional currencies, which are already strained by recent tariff announcements and escalating global trade tensions.