Forex Today: US PCE inflation data eyed ahead of long weekend

Eren Sengezer FXStreet

Here is what you need to know on Friday, December 23:

Markets stay relatively calm early Friday as trading conditions remain subdued heading into the Christmas holiday. Germany's Bundesbank will release its monthly report during the European trading hours. In the second half of the day, the US Bureau of Economic Analysis (BEA) will publish the Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's preferred gauge of inflation, data for November. The University of Michigan's final revision to the December Consumer Confidence Index, November New Home Sales and Durable Goods data will also be featured in the US economic docket before the long weekend. Stock markets in the US will operate at usual hours but bond markets will close one hour earlier than usual. Both markets will be closed on Monday, December 26.

Pre-Christmas US Data Preview: Core PCE and Durable Goods may extend US Dollar retreat.

On Thursday, the BEA revised the annualized Gross Domestic Product growth for the third quarter to 3.2% from 2.9% in the previous estimate. The upbeat data helped the US Dollar gather strength against its rivals in the American session. Additionally, Wall Street's main indexes suffered heavy losses, helping the currency hold its ground as a safe haven. After having closed modestly higher on Thursday, the US Dollar Index moves sideways slightly below 104.50 in the European morning. The 10-year US Treasury bond yield extends its sideways grind at around 3.7% and US stock index futures trade little changed on the day.

EUR/USD registered small daily losses on Thursday but seems to have steadied slightly above 1.0600 early Friday.

GBP/USD dropped to its lowest level in more than three weeks below 1.2000 on Thursday as the risk-averse market environment weighed heavily on Pound Sterling. Following a late recovery, the pair managed to settle above 1.2000 on Friday.

USD/JPY closed virtually unchanged on Thursday near 132.50. The data from Japan showed earlier in the day that the National Consumer Price Index (CPI) in November edged higher to 3.8% in November, compared to the market expectation of 3.7%. This print, however, failed to trigger a noticeable reaction and the pair was last seen trading modestly higher on the day at 132.70.

Gold price declined sharply on Thursday on upbeat US growth data and closed below $1,800. XAU/USD recovers modestly early Friday but continues to trade below $1,800 for the time being.

Bitcoin struggles to find direction as it continues to move up and down in a narrow channel slightly below $17,000. Ethereum trades near $1,200 for the third straight day on Friday.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

AUD/USD: The 0.7000 region holds the downside, for now

AUD/USD has started the week in a negative fashion, giving away part of Friday’s uptick and refocusing on the downside. The pair’s daily decline has come on the back of the another firm performance of the Greenback, although it has met some decent contention near the 0.7000 neighbourhood.

USD/JPY struggles below 157.00 on weak USD; holds above one-month low ahead of Fed, BoJ meetings

USD/JPY attracts fresh sellers during the Asian session on Monday, stalling its recovery from the lowest level since September 18, touched Friday as a further decline in US bond yields weighs on the US Dollar. Meanwhile, the Japanese Yen benefits from a more hawkish BoJ, further weighing on the currency pair. The downside, however, seems limited as traders keenly await Fed and BoJ policy meetings later this week.

Gold holds on just above $4,000

Gold clings to daily gains, leaving behind two daily drops in a row and reclaiming the key $4,000 mark per troy ounce and above on Monday. The better tone in the US Dollar and mixed US Treasury yields accompany the precious metal’s uptick, while declining crude oil prices appear to sustain the bounce for now.

Bitcoin vs Gold: BTC springs above $80K as XAU tops $4,000 amid low compressed volatility

Bitcoin (BTC) is bouncing back above $80,000 on Monday, while Gold (XAU/USD) is springing above the pivotal $4,000 level, up a modest 0.34% and 0.64%, respectively. Both assets are advancing amid low volatility as market participants position ahead of the Federal Reserve’s (Fed) decision on Wednesday and earnings from several major tech companies.

Everyone's bracing for a hawkish central bank week. Here's why the surprise could be dovish

Five of the world's major central banks are preparing to announce monetary policy decisions this week, with investors increasingly anticipating higher interest rates as the global energy shock continues to push inflation above target.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.