Overview
- Stronger-than-expected July personal income and a rise in personal spending, together with an upward revision to second-quarter consumption, pushed U.S. Treasury yields higher and helped support the dollar.
- The Federal Reserve’s preferred inflation gauge, core PCE, matched expectations which reduced pressure for an aggressive Fed move and removed some upside for the dollar.
- A roughly 3% drop in WTI crude eased near-term inflation concerns for oil-importing economies and acted as a headwind to further dollar gains.
- A New York Times report that the U.S. State Department plans to return diplomats to evacuated Middle East posts reduced demand for safe-haven assets and earlier pressured the dollar.
- Markets now place about a one-in-three chance of a 25 basis-point Fed hike in September while pricing stronger odds of ECB and BOJ tightening, so upcoming central bank speeches and new data or oil moves are likely to drive near-term currency swings and borrowing costs for consumers and businesses.