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On Friday, the dollar index (DXY00) decreased by 0.41%, pressured by the August core PCE price index, which met expectations, indicating that the Federal Reserve may continue easing monetary policy. The University of Michigan’s September consumer sentiment index was revised down to 55.1, marking a four-month low, contrary to expectations of 55.4. Meanwhile, the markets anticipate a 90% probability of a 25 basis point rate cut during the upcoming FOMC meeting on October 28-29.
In economic reports, August personal spending rose by 0.6%, surpassing the 0.5% forecast and marking the biggest gain in five months, while personal income increased by 0.4%, above the expected 0.3%. The August core PCE price index rose by 0.2% month-over-month and 2.9% year-over-year, aligning with predictions. Additionally, the euro (EUR/USD) gained 0.32%, supported by stronger-than-expected ECB inflation expectations, while USD/JPY fell by 0.20% as the yen rebounded.
Gold prices increased by 1.01% ($37.90) on Friday, driven by a weaker dollar and a favorable inflation report, with ETF gold holdings reaching a nearly three-year high. The favorable economic conditions have combined with geopolitical risks to bolster demand for precious metals, despite hawkish comments from Richmond Fed President Tom Barkin, who indicated limited risks of economic deterioration.
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