The U.S. dollar lost steam early Tuesday as investors became increasingly confident that the Federal Reserve would not raise interest rates again. The dollar fell 0.1% against the Japanese yen to 148.58 while the euro remained relatively flat at $1.09505.
On Thursday, investors will look to digest the U.S. October personal consumption expenditures report (PCE). Given that the core PCE reading included in the report is the Federal Reserve’s preferred inflation gauge, this report is expected to provide a major hint as to the Fed’s fiscal policy path.
Currently, consumer inflation is running at a rate of 3.2% – a decline from September’s 3.7% reading. Still, consumer spending could play a role in influencing the Fed’s next rate decision. “Everything has to go great and in the Fed’s direction” in order for the bank to institute four interest rate cuts as investors hope, Lombard Odier economist Sami Chaar explained.