The dollar awaits PCE data for Fed policy direction, Yen inched upward – London Business News

The US dollar continued its decline ahead of pivotal U.S. inflation data that could shape future Federal Reserve policy decisions.

The market anticipates the release of the second estimate of the U.S. GDP growth rate for Q4, with Q3 figures at 4.9% and consensus projecting a 3.3% growth.

Furthermore, expectations are set for the monthly core personal consumption expenditures price index, a key inflation gauge for the Fed, to rise to 0.4% from the previous 0.2% although it could slow on a yearly basis.

US durable goods numbers are also under scrutiny for further insights into the economy. Overall, the dollar could see additional downward pressures if GDP growth and inflation data show a slowdown.

Meanwhile, the Japanese yen has regained some ground against the dollar while expectations remain mixed. Headline and core inflation rates in Japan slowed to 2.2% and 2% respectively in January, marking the lowest figures since May 2022.

The Bank of Japan could maintain its ultra-loose monetary policies, amidst disappointing economic data while authorities have intervened verbally to address the yen’s weakness. Traders could turn to industrial production data later this week for more insight on the state of the economy.