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US PCE Can Decide Fed’s Trajectory

US PCE Can Decide Fed’s Trajectory

On Friday, a crucial piece of data will be released that could decide the fate for the dollar throughout the rest of this year. That’s because it’s the preferred inflation measure for the Fed, and could resolve an important conundrum for the market.

There has been a monetary policy situation brewing most of the year, and it’s now coming down to the wire with just two more rate decisions left for the Fed. Broadly speaking, it’s expected that the Fed will keep rates steady through all of next year. The question of what rate to use is still open, and could affect the dollar for the remainder of the year.

What’s going on?

Even after last week’s “hawkish pause” by the Fed, the markets and the central bank still don’t agree on what’s going to happen with interest rates for the rest of the year. The Fed’s statement pointed to there still being a high chance of there being a rate hike before the start of 2024. It could be either November or Decemeber. This is less likely because it is believed that hiking in the winter will have a greater negative impact on the economic situation.

Over 80% of traders do not expect a rate increase in November. Over 60% of traders still think that the Fed will not tighten any further. Tomorrow’s…

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