26/07/2024
Written by: Ian Morley
Summary:
US Core PCE inflation was in line with expectations, indicating higher inflation in January. Stronger personal spending and income led to broad USD gains, resulting in GBPUSD and EURUSD finishing the week lower.
Speeches:
Market Insight:
Today’s focus is on February’s inflation figures, expected to be lower. The key question is whether this will prompt a rate cut in next week’s ECB meeting. However, given ECB President Lagarde’s recent comments emphasising the need for Q1 data, a rate cut seems unlikely. Nevertheless, a lower inflation figure today could weaken the EUR.
Additionally, final PMI manufacturing numbers and the US ISM manufacturing report will impact USD movements. The latter is expected to show a slight increase in activity, though still in contraction territory. Any further contraction would strengthen the narrative of a resilient US economy, leading to USD gains.
Analysis:
The spotlight is on European inflation data today, following lower figures from France and Germany. Unless there’s a significant drop in inflation beyond expectations, it’s unlikely to influence next week’s ECB meeting.