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Euro Gathers Strength as PCE Inflation Rises

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  • Euro Closes in on Key Mark
  • US Core PCE Inflation Below Expectations
  • Wall Street Trading Slightly Lower to Finish Week

In the forex market, both the Pound and Euro showed some resilience today to bounce back against a US Dollar that had started the week strongly but has given up some of those gains amid a more positive market outlook. PCE Core Inflation jumped to 3.5% which was below estimate but still registered as the fastest gain in almost 30 years. On Wall Street, the market traded down slightly with the big news being a let down in earnings for Amazon as they were also hit with a huge fine from the European Privacy watchdog. 

Euro Finishes Week on High

The Euro has endured a turbulent week as have those forex trading the currency. In the early part of the week and up until the Fed policy decision, the EUR/USD had hit lows around the mid 1.17 mark. This was not the case today though as it traded back strongly and moved over 1.19 with further gains hard to rule out before the end of the day. 

This move is backed by strong data coming from the bloc. Prelim GDP data from the EU has managed to outstrip expectations with a number of 2%. This has been matched by a relative weakening in the USD compared to earlier in the week with traders having had time to digest the continued Fed support and take a more positive outlook. 

Record Pace Jump for PCE Inflation 

The PCE Core inflation number, as forex brokers and others experienced in the market know, has long been used as one of the most critical guiding points for the Fed when it comes to determining the inflation in the economy. What they are met with today is a number that has risen at a record pace despite coming in below what analysts had expected. 

The fact that the expectation had been set higher than the 3.5% result has certainly managed to soften the news that would appear to already be priced into the market, even if it is the fastest year-on-year rise since 1991. The month-on-month number is still up 0.4% though the cool attitude of the Fed on inflationary pressure seems to have rubbed off on the market.

Wall Street Dips as Amazon Disappoints

On the street, stocks have traded down slightly across the board. The story today has been dominated not only by the Robinhood IPO of yesterday and its fall from the IPO opening price of $38, but also by the earnings disappointment of Amazon. 

Stock of the online giant has dropped more than 7% today as they missed their quarterly revenue projections for the first time in three years. This despite posting their third $100 billion quarter in a row. The fact they also received an $887 million fine from the EU privacy watchdog has added salt to the wounds. 

 

Anthony is a financial journalist and business advisor with several years’ experience writing for some of the most well-known sites in the Forex world. A keen trader turned industry writer, he is currently based in Shanghai with a finger on the pulse of Asia’s biggest markets.

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