USD Forex Market Holding Ahead of Key Inflation Report


  • Dollar Retains Gains Heading to Weekend
  • All Focus on Inflation Data
  • Depleted Tech Names Pressure Stock

The US Dollar forex market has managed to hold on to some recovery gains it had made on Thursday heading into an important Friday where much of the market focus will be on inflation. Analysts and traders alike will be watching the PCE Price Index for any indication of how inflation is in the current market and how it may be tackled by the Fed. At the same time, Wall Street futures are down as heavy pressure comes from struggling tech giants. 

Dollar Holds Firm Under Pressure

This week has brought significantly more pressure to the US Dollar and those forex trading the currency than has been seen in recent months. The US Dollar Index, a measure of the strength of the currency against a basket of other major FX currencies, had grown accustomed to trading at or near new all-time high levels. This has not been the case this week as the index slipped toward 110.00. This is still very high in a historical context, but is some way off where the Dollar had been.

At the same time on Thursday, the traditional safe haven US Dollar was in recovery mode and received a boost from data released in the US. This showed that the US economy expanded at an annualized pace of 2.6% in the third quarter. This was more than the 2.4% which analysts had predicted, and considering the inflation-sensitive environment currently, any such number is likely to attract buyers of the Dollar.

Key Inflation Metric is Prime Focus

As mentioned, everyone from forex brokers, to traders, analysts, and others in the market are honed in on inflation. This is the number one priority issue in major nations around the world along with how the various Central Banks are choosing to handle it. Today sees the release of a very important number in the US, the Personal Consumption Expenditures (PCE) Price Index.

This is the measure that the Federal Reserve usually prefers to view when deciding how to approach inflation. It has also been one of the most watched for any clues or information on what may be coming next from Jerome Powell and the Policymakers in the US. September pending home sales data is also due as house prices continue to fall.

Stocks Continue to Struggle 

On Wall Street, approaching the weekend, stocks continued to grind lower as the market in general seems to be weighed down by big tech underperformance. Amazon stock was the latest faller yesterday. The online giant plunged more than 18% at some points in extended hours trading Thursday.

This, alongside similar albeit not so pronounced drops in other major growth names, has undoubtedly given the market pause. Few expected these typically favored names to fall so fast. Heading into Friday, the three major US indices were all fractionally lower with the Nasdaq leading the decline.


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