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US Dollar May Rise on PCE Data as Euro Looks Past CPI Uptick

US Dollar May Rise on PCE Data as Euro Looks Past CPI Uptick

Ilya Spivak, Head Strategist, APAC

Talking Points:

  • NZ Dollar sinks on soft data, Yen down as Asia/Pacific stocks rise
  • Euro may look past first CPI gain in 4 months as ECB looms large
  • Upside surprise on US PCE gauge might drive US Dollar higher

The Japanese Yen declined in Asia Pacific trade as most regional stocks advanced, sapping support for the anti-risk currency. The New Zealand Dollar proved to be weakest on the session however, sinking after ANZ business confidence data saw sentiment deteriorate for a second consecutive month. The currency fell alongside local yields, hinting the data hurt RBNZ rate hike prospects.

Eurozone CPI data headlines the economic calendar in European hours. The headline on-year inflation rate is expected to edge up to 1.4 percent, marking the first increase in four months. This would match yesterday’s analogous German CPI numbers and may prove likewise similar in the absence of a strong Euro response, with traders unwilling to commit before next week’s ECB rate decision.

Later in the day, the spotlight turns to US PCE data, the Fed’s favored inflation gauge. A downtick is expected but another upside surprise echoing broad improvement in economic data outcomes since mid-June may well offer a lifeline to Fed rate hike speculation and boost the US Dollar. Lasting follow-through might have to wait for Friday’s much-anticipated release of official employment statistics however.

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Asia Session

European Session

** All times listed in GMT. See the full DailyFX economic calendar here.

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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