✍️ By Md Golam Rabbani

The US Dollar has been moving higher as traders prepare for the release of the Core PCE Price Index for July. This key inflation measure is closely watched by the Federal Reserve, and it provides insights into the future path of interest rates.

The month-on-month reading is expected to show a modest fall of 0.3%, signaling stability in inflation. However, the year-on-year figure of 2.9%, slightly above expectations, suggests that inflation remains sticky despite signs of gradual cooling in broader economic measures. This combination indicates that the Fed may continue its “higher for longer” interest rate stance.

A stronger dollar has immediate implications for global markets. Forex majors like EURUSD and GBPUSD may face downward pressure, while safe-haven currencies like JPY and CHF could see minor gains as investors adjust their positions. Commodities are also affected, with gold (XAUUSD) likely facing selling pressure due to the rising dollar, while oil prices may respond more to global demand signals.

US stock markets could experience mixed reactions. Technology and other interest rate-sensitive sectors may face pressure, while indices like the Dow Jones may be more stable but still fluctuate with investor sentiment. The S&P 500 and Nasdaq could see short-term volatility around the PCE release, reflecting the market’s sensitivity to inflation and interest rate expectations.

In conclusion, the upcoming PCE data will play a crucial role in shaping market sentiment. Traders and investors should watch for movements in the US Dollar, major currencies, gold, and equities, as these reflect the market’s interpretation of inflation and monetary policy. While the data may influence short-term trading, it also offers valuable insights for planning longer-term investment strategies.