Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Dollar Edges Higher; PCE Data Points to Early Fed Hike

ForexNov 01, 2021 04:05AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters.

By Peter Nurse - The dollar pushed higher in early European trading Monday, continuing the previous session’s gains after strong inflation numbers cemented the case for tapering at this week’s Federal Reserve meeting.

At 3:05 AM ET (0805 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% higher at 94.243, just below Friday's peak of 94.302, a level not seen since Oct. 13.

This follows the release of data Friday which showed the Fed’s favorite inflation measure, core personal consumption expenditures index, rising at an annual 4.4% in September, the fastest since 1991.

The central bank holds a two-day policy-setting meeting this week, concluding on Wednesday, and is widely expected then to announce a tapering of stimulus. However, these continued inflationary pressures have solidified market expectations that the Fed will start increasing interest rates earlier than previously guided.

Influential investment bank Goldman Sachs (NYSE:GS) has responded by bringing forward its forecast by a year to July 2022 for the first U.S. interest rate hike following the pandemic.

"The main reason for the change in our liftoff call is that we now expect core PCE inflation to remain above 3% — and core CPI inflation above 4% — when the taper concludes," Goldman's chief economist, Jan Hatzius, wrote in a client note over the weekend. 

USD/JPY traded 0.3% higher at 114.33, just below the strongest level since Oct. 20, after Japanese Prime Minister Fumio Kishida's ruling Liberal Democratic Party defied expectations and held onto its strong majority in Sunday's parliamentary election. This could mean that he now has leeway to push through more stimulus to boost the beleaguered economy, at the expense of the yen.

GBP/USD dropped 0.2% to 1.3659 ahead of Thursday’s Bank of England meeting, which could see the central bank lift interest rates if it judges the country’s economy to be strong enough to cope as inflation mounts.

AUD/USD was 0.3% lower at 0.7502, retreating from a near four-month high of 0.7555 reached last week ahead of Tuesday’s meeting of the Reserve Bank of Australia.

The country’s central bank is under pressure to drop a commitment to keep yields on its April 2024 target bond at 0.1% as house prices soar. Late last week it chose not to defend the 0.1% target for three-year bond yields, which consequently rose to over 0.8%. 

EUR/USD fell 0.1% to 1.1553, only marginally above Friday's low of 1.1535, the weakest since Oct. 13, which followed Thursday’s European Central Bank meeting.


Dollar Edges Higher; PCE Data Points to Early Fed Hike

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
William Bailey
William Bailey Nov 01, 2021 4:33AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Taper a joke . The 80 billion to stocks does nothing since the rate of bond expiration far exceeds the 80b Fed puttung in!! As bonds expire fake cash sucked out faster than 80b month can be pumped in
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email