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US Dollar declines as PCE falls, markets confident of larger November cut

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  • US inflation signals are cooling with PCE reading below expectations.
  • Consumer sentiment has rebounded, indicating brighter economic expectations.
  • USD might see additional downside if the markets remain stubborn on November’s 50 bps cut bet.

The US Dollar Index (DXY), which measures the value of the USD against a basket of major currencies, stands soft after the release of the US Personal Consumption Expenditures (PCE) data from August. The headline PCE inflation, the Federal Reserve's (Fed) preferred inflation measure, came in softer than expected, while the core PCE inflation matched expectations.

Investors will be attentive to incoming data to continue placing their bets on the next Fed decision. Now focus shifts to September’s labor market data.


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