The US PCE inflation indicator, which is the Fed’s preferred measure of inflation in the US economy, was in line with expectations. This number was released Friday, following the extremely strong GDP growth number, which will alleviate fears of inflationary pressures and allow further rate cuts. Trump also announced further global tariffs on pharmaceuticals, furniture and trucks. US equity markets rallied to close out a week of volatility, while the US Dollar settled, following strong gains. The EUR managed to regain 1.1700, while the GBP attempted to hold 1.3400.
Commodity currencies suffered the strong performance of the reserve currency, with the AUD falling back below 0.6550, while the NZD stumbled to 0.5760. The RBA meets this coming week to decide if they will make further rate cuts, but are predicted to hold, in the face of growing inflationary pressures. US markets will be analysing the strength of the US labour markets, with a view to the need for further rate cuts.
