Dollar Index Limits Upside As US GDP Weakens; PCE Awaited

Published on May 31, 2024 13:27

The US dollar steadied on Friday following a sharp slide in the previous session after US GDP came in weaker than expected pointing to a possible reduction in interest rates by Fed to keep the economy ashore. Persistent tensions in the Middle East are also supporting the safe haven currency. Currently, the dollar index futures are quoting at 104.84, up 0.17% on the day after a 0.30% decline seen yesterday. The second estimate of US Gross Domestic Product (GDP) showed the economy expanded at an annualized pace of 1.3% in Q1 from 1.6% in the previous reading. Moreover, the US weekly Initial Jobless Claims for the week ending May 25 rose to 219K from the previous week of 216K, above the market consensus of 218K. Investors now await clarity on Federal Reserve�s stance on interest rates from the upcoming PCE report although concerns on sluggish inflation and hawkish comments from Fed officials are likely to deter the Fed from taking the action in the near term. Among the basket currencies, EURUSD and GBPUSD are trading lower at $1.0837 and $1.2708 respectively.