Month end related buying of the greenback helped steady the dollar index as traders continue to review data releases and mixed signals from Fed officials. After experiencing its worst month in a year, the dollar index steadied, pushing EURUSD towards the bottom of its recent range to trade around 1.09. Key data released yesterday showed that US Core PCE inflation eased in October, which could help to reassure both investors and the Fed that inflationary pressures will abate. After the Fed’s Waller signaled a dovish tone earlier this week, his San Francisco colleague Mary Daly yesterday said that interest rates are in a “very good place” to control inflation. However, she also suggested that she is not thinking about interest rate cuts and that it was too soon to say if hikes are finished. Recent Fed speak comes after the release of the Beige Book on Wednesday, which showed that US economic activity slowed in recent weeks as consumers pulled back on discretionary spending as higher interest rates take hold on household budgets. Markets will be hoping for fresh clues on the outlook for the US as we look forward to a key speech later today from Chairman Jerome Powell.
Both the pound and the single currency slipped a touch against the greenback yesterday, with the pound drifting on a lack of UK data and the euro dipping after the release of lower-than-expected inflation data. PMIs from the euro area and the US will be the main focus today, along with Powell’s speech with 1.0960 seen as initial resistance in EURUSD and on the downside support comes in at 1.0875 ahead of 1.0810.
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