Forex Today: US Dollar appears to find a floor, focus shifts to PCE inflation data

Here is what you need to know on Thursday, November 30:

Financial markets remained tentative early Thursday, as Asian stocks traded listlessly, tracking the flattish close on Wall Street overnight. Disappointing official Chinese PMI data and renewed property market concerns were somewhat offset by hopes of more stimulus coming through from China.

The Purchasing Managers' Index (PMI) for China's manufacturing sector came in at 49.4 in November, down from 49.5 last month. The Non-Manufacturing PMI slipped to 50.2 in November from 50.6 in October, marking the weakest reading since December 2022.

Growing acceptance over a potential US Federal Reserve (Fed) policy pivot next year also kept investors going. Markets continue wagering a 49% probability of a Fed rate cut in March even after the US economy expanded at a faster pace in the third quarter than previously estimated.

Data published by the Bureau of Economic Analysis (BEA) showed on Wednesday, US Q3 GDP expanded at an annualized rate of 5.2%, revised up from the preliminary reading of 4.9%. Additional details from the publication showed that the PCE inflation was revised down to 2.8% on a quarterly basis in Q3 from 2.9% first readout while the Core PCE inflation was downgraded to 2.3% in Q3 from the flash estimate of 2.4%.

Attention now turns toward the US Core Personal Consumption Expenditures (PCE) Price index data and speeches from several Fed policymakers for fresh insights into the US central bank’s interest rate outlook. Traders also stay vigilant amid the end-of-the-month trading action, which could infuse volatility across the market.  

At the time of writing, the US Dollar Index is keeping its recovery momentum intact at around 102.80, as the benchmark 10-year US Treasury bond yields see a modest uptick toward 4.30%. The US S&P 500 futures tick 0.12% higher on the day, reflecting some market optimism.

The Japanese Yen is preserving its weekly gains against the US Dollar, as USD/JPY remains in a downside consolidative mode at around 147.00. Speculations that the Bank of Japan (BoJ) will likely end its negative interest rate policy (NIRP) early next year continue to support the domestic currency. However, the upside remains capped in the Yen amidst the dovish comments from the BoJ board member Toyoaki Nakamura, who said on Thursday that "we will need some more time before we can modify easy monetary policy.”

EUR/USD is holding lower ground below 1.1000, as the Euro feels the heat from softer German and Spanish inflation data. Markets eagerly await the preliminary Eurozone inflation data for fresh hints on the European Central Bank’s (ECB) path forward on interest rates. A modest US Dollar uptick is also keeping the pair’s upside attempts in check.

GBP/USD is better bid near 1.2700, underpinned by hawkish BoE commentary, implying that the British central bank is not done with its interest rate hiking cycle. BoE’s policymaker, Megan Greene, is due to speak at Leeds University. Greene was one of the hawkish dissenters who voted in favor of a 25 basis points (bps) rate hike at the latest meeting

Gold price has paused its five-day uptrend, on the back foot around $2,040 early Europe while WTI is holding fort above the $78 mark ahead of the critical OPEC+ meeting. Two OPEC+ sources said the alliance was discussing a deeper collective supply cut, with media speculating cuts to that extent of 1 million barrels per day (bpd).