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Forex Today: Dollar Struggles to Capitalize on Upbeat Data Ahead of PCE Inflation

This is what you need to know to trade today friday january 27:

The Dollar Index managed to post small daily gains on Thursday following the release of strong US macroeconomic data, but seems to be struggling to muster further bullish momentum early on Friday. The 10-year US Treasury yield remains above 3.5% and US stock index futures are trading slightly lower after rallying on Thursday. Heading into the weekend, market participants will be closely watching US Personal Consumption Expenditure (PCE) price index data. Personal spending and personal income figures for December will also feature on the US economic calendar, along with pending home sales and the University of Michigan Consumer Sentiment Index (final) for January.

Prior to December PCE inflation in the US: Is there room for further dollar weakness?

The US Bureau of Economic Analysis reported Thursday that the US economy grew at an annual rate of 2.9% in the fourth quarter. Although this figure was lower than the 3.2% registered in the previous quarter, it exceeded expectations of 2.6%. Other US data revealed weekly jobless claims fell from 192,000 to 186,000 and durable goods orders rose 5.6% in December, compared with analyst estimates of 2.5%. However, these encouraging numbers had little influence on the markets’ assessment of the Fed rate outlook. According to CME Group’s FedWatch tool, there is still almost a 70% chance that the Fed will stay on hold after raising the policy rate by 25 basis points in February and March.

The EUR/USD he snapped a winning streak on Thursday and dipped slightly early Friday. The pair is trading around 1.0870. European Central Bank (ECB) President Christine Lagarde is scheduled to deliver a speech at 1030 GMT, but she is unlikely to comment on monetary policy as she has already started the “calm period”.

The pair GBP/USD came under slight bearish pressure during Asian trading hours and dipped below 1.2400 after closing broadly unchanged on Thursday. Reuters reported that Britain’s Treasury Secretary Jeremy Hunt will say on Friday that he will tackle the country’s weak productivity growth, including by using post-Brexit financial reforms to spur more investment in the economy.

The USD/JPY managed to rally and trade little changed on the day, slightly above 130.00. Japanese Prime Minister Fumio Kishida said in a hearing on Friday that he recognized the Bank of Japan’s (BoJ) monetary policy decision in December as an operational adjustment to ameliorate and keep the effects of monetary easing smooth. However, this comment does not seem to have a significant impact on the valuation of the Japanese yen. Earlier, data from Japan showed the Tokyo Consumer Price Index rose 4.4% on an annual basis in January, up from 4% in December, as expected.

The price of Prayed It slumped amid rising US Treasury yields and erased much of its weekly gains on Thursday. At press time, the XAU/USD pair is trading lower, slightly above $1,920.

Bitcoin seems to have entered a consolidation phase around $23,000 after Wednesday’s decisive rally. ethereum it lost almost 1% on Thursday and continued to stretch lower early on Friday. The ETH/USD pair lost more than 1% on the day, settling at $1,580.

Source: Fx Street

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