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Dollar slides after softer US PCE inflation, sterling extends BoE rally

The drop came after US headline PCE rose 0.3% month over month, below the 0.4% consensus, undercutting the case for another rapid Fed hike.

Reported · Written up by our desk · Major Pairs

Dollar weakness spread broadly in FX trading after a US inflation report pointed to less urgency for additional Fed tightening, according to Action Forex.

The outlet said headline PCE increased 0.3% month over month, below the 0.4% consensus, reinforcing arguments that there is “no need for urgency” on a further rate hike.

Sterling’s move diverged as the UK’s rate outlook firmed, with the report noting that stronger UK GDP landed on top of an existing BoE tightening repricing.

Action Forex also reported that the Australian dollar underperformed, despite Australia posting headline CPI at 4.0% year over year, because the trimmed mean was softer than expected and did not rebuild expectations for rapid RBA follow through.

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