- Markets are chasing safe havens such as Gold to fresh all-time highs.
- Traders see US PCE release adding to equity sell off.
- The US Dollar Index trades flat around 104.30, though no safe-haven flow in the Greenback.
The US Dollar Index (DXY), which tracks the performance of the US Dollar (USD) against six major currencies, is currently flat near 104.30 at the time of writing on Friday. Traders are not really looking at the Greenback but rather at an exodus from Equities and Cryptocurrencies into the precious metals’ market, where Gold has hit another all-time high this Friday at $3,086. The reciprocal tariff deadline is approaching fast, April 2, and clearly has struck a nerve amongst traders and market participants.
On the economic data front, all eyes were on the Federal Reserve (Fed) preferred inflation gauge, the US Personal Consumption Expenditures (PCE) data for February. Nog big beats or surprises. Later this Friday Fed Vice Chairman Michael Barr and Atlanta Fed President Raphael Bostic are still due to speak.
Daily digest market movers: PCE was no surprise
- The US Personal Consumption Expenditures data for February has been released:
- The monthly headline PCE came in at 0.3% as expected, unchanged from the previous 0.3%. The yearly gauge remained stable at 2.5%.
- The monthly core PCE grew by 0.4%, beating the 0.3% expected. The yearly core PCE ticked up to 2.8% from 2.6%.
- At the same time, the US Personal Income month-on-month for February jumped to 0.8%, a big beat of the 0.4% expected and from 0.9% previously. The US Personal Spending for February fell to 0.4%, below the expected 0.5%, coming from the previous contraction of 0.2%.
- At 14:00 GMT, the University of Michigan Consumer Sentiment Index reading for March is expected to remain stable at 57.9. The 5-year Consumer Inflation Expectations are set to remain unchanged at 3.9%.
- At 16:15 GMT, Federal Reserve Bank Vice Chair for Supervision Michael Barr will speak on Banking Policy at the 2025 Banking Institute in Charlotte, N.C.
- At 19:30 GMT, Federal Reserve Bank of Atlanta President Raphael Bostic will moderate a policy panel at the third annual Georgia Tech-Atlanta Fed Household Finance Conference at the Atlanta Fed, Atlanta, Georgia.
- Equities are diving lower with losses between 0.5% to 2% crossing from Asia over Europe and into US futures.
- According to the CME Fedwatch Tool, the probability of interest rates remaining at the current range of 4.25%-4.50% in May’s meeting is 87.1%. For June’s meeting, the odds for borrowing costs being lower stand at 65.5%.
- The US 10-year yield trades around 4.31%, looking for direction with some small safe haven inflow.
US Dollar Index Technical Analysis: PCE held no real surprises
The US Dollar Index (DXY) has been roughly consolidating since that seismic drop at the start of March. Slowly but surely, some small unwinding of that big move lower is starting to unfold. Look for a synchronized move, with Gold paring back gains and the rate differential between the US and other countries widening again, for a comeback of the DXY to 105.00/106.00.
With the weekly close above 104.00 last week, a return to the 105.00 round level could still occur in the coming days, with the 200-day Simple Moving Average (SMA) converging at that point and reinforcing this area as a strong resistance at 104.95. Once broken through that zone, a string of pivotal levels, such as 105.53 and 105.89, could limit the upward momentum.
On the downside, the 104.00 round level is the first nearby support after a successful bounce on Tuesday. If that level does not hold, the DXY risks falling back into that March range between 104.00 and 103.00. Once the lower end at 103.00 gives way, watch out for 101.90 on the downside.
