Our US economist and the market are expecting the headline PCE inflation print to slow down to 2.5% YoY from 2.6% YoY in December. The more important core PCE deflator print – the Fed’s preferred US inflation measure – is expected to slow down more meaningfully to 2.6% YoY from 2.8% previously. If confirmed, US core inflation would slip to its lowest level since at least June 2024 which, in turn, was the lowest print since March 2021. US rates markets are pricing in more than 50bp of Fed rate cuts for 2025 already, however. This suggests that some Fed-related negatives are already in the price of the USD. It would thus take evidence that US inflation softened more than expected to encourage US rates investors to boost their Fed easing expectations, in a blow to the USD.
Indeed, tariff news is back supporting the USD and has seen the currency surge late in the week on the back of risk-off trading. US President Donald Trump’s announced on Truth Social that tariffs on Mexico and Canada will go ahead as planned on 4 March as well as a further 10% rise of tariffs on Chinese goods gave the USD a boost in order to encourage the countries to do more about the flow of Fentanyl into the US.
Indeed, tariff news is back supporting the USD and has seen the currency surge late in the week on the back of risk-off trading. US President Donald Trump’s announced on Truth Social that tariffs on Mexico and Canada will go ahead as planned on 4 March as well as a further 10% rise of tariffs on Chinese goods gave the USD a boost in order to encourage the countries to do more about the flow of Fentanyl into the US.
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tradingview.com/v/yDFPnb1J/
2. Signal Performance:
thedailyfx.com/performance/
3. We provide Free TradingView Premium and Essential Membership.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.