The US Dollar is poised for a second consecutive week of gains but has seen its upward momentum wane following softer US GDP and Personal Consumption Expenditures (PCE) data, alongside dovish remarks from New York Fed President Williams, according to FX Street (MUFG). These developments have weighed on currency and commodity markets, influencing expectations around Federal Reserve rate hikes.
Gold prices have stabilized above the $4,000 mark, supported by a weaker US Dollar and lower Treasury yields after the US PCE inflation report largely met forecasts. This has tempered near-term expectations for further Fed rate increases, with a Reuters poll via FX Street showing that 78 of 102 economists now expect the Federal Reserve to maintain interest rates in the 3.50%-3.75% range throughout the year, up from 72 economists in early June.
In currency markets, the Canadian Dollar strengthened against the US Dollar, with USD/CAD trading lower around 1.4180, down 0.13% on Friday. For Japanese investors, these shifts highlight the ongoing sensitivity of FX markets to US economic data and Fed guidance, reinforcing the importance of monitoring US monetary policy developments closely.