The economists of ING They expect a data of 0.4% of the US core PCE to be published on Thursday, above the consensus, which should serve as support for the Dollar this week.
Markets underestimate magnitude of Fed easing
The release of the PCE deflator on Thursday is one of the key points of this week's US calendar, and we forecast an underlying reading of 0.4% mom above consensus thanks to the boost from insurance inflation, medical expenses and portfolio management fees. Personal consumption numbers could be weaker than expected, but other activity indicators such as Conference Board Consumer Confidence and ISM Manufacturing should rise.
Overall, we expect this last week of February to encourage less aggressive bets on Fed easing. Market prices are between three and four rate cuts between now and the end of the year, with an 80% probability in June. We see that the USD will receive a round of support – possibly the last – thanks to the strong PCE numbers and that the dollar will have a good week.
Our outlook beyond the short term remains bearish for the Dollaras we believe markets are underestimating the magnitude of the Fed's easing.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
