Dollar holds gains as attention turns to spending data for Fed clues
The dollar was steady against the euro and sterling on Friday, holding on to steep gains as investors awaited U.S. consumer spending data after better-than-expected growth numbers dampened expectations of further easing by the Federal Reserve this year.
The euro was hovering near a three-week low at $1.1669 while sterling was flat at $1.3347 after touching a near two-month trough on Thursday.
The yen traded at an eight-week low following a new raft of tariffs announced by U.S. President Donald Trumpwhich included a 100% levy on branded drugs, 25% on heavy-duty trucks, and 50% on kitchen cabinets.
The dollar index , which measures the greenback against major currencies, was poised for its biggest weekly advance in two months after figures on U.S. economic growth, unemployment claims, durable goods and wholesale inventories all beat expectations on Thursday.
FED RATE CUT BETS TRIMMED
Attention now turns to the release of U.S. consumer spending data later on Friday for further signals on how urgently the economy needs additional stimulus from the Fed.
Markets are now pricing in about a 12% chance of the Fed keeping rates unchanged next month, up slightly from 8.1%, a day earlier, according to the CME FedWatch Tool. The cumulative policy easing priced in by the end of the year has also dipped below 40 basis points.
The Commerce Department reported on Thursday that U.S. gross domestic product rose by an upwardly revised rate of 3.8% from April through June, higher than the 3.3% initially reported. Economists polled by Reuters did not expect the rate to be revised.
Friday's personal consumption expenditures (PCE) price index, the Fed's preferred inflation measure, is expected to show a 0.3% month-on-month increase for August and a 2.7% year-on-year rise, according to a Reuters poll.
"At a time when Fed members are worried about elevated inflation, we think such a report will be encouraging," said Bansi Madhavani, senior economist at ANZ.
Provided that monthly inflation data signals that the inflation trend remains intact, he added, "we expect that the Fed can continue to ease in gradual increments of 25 basis points".
In Japan, where the central bank is on a tightening cycle, data showed core inflation in September for Tokyo stayed well above the central bank's 2% target, keeping alive expectations of a near-term interest rate hike.
In cryptocurrencies, bitcoin gained 0.4% to $109,639.28, while ether rose 1.3% to $3,939.60.
Source: Reuters
