Later today at 4:30 PM Dubai time, markets are expecting important consumer spending data in the United States. Expectations point toward a reading of 0.2% compared to 0.3% previously.
Personal Consumption Expenditure (PCE) is known as the Fed's preferred indicator for measuring inflation, given that it represents basic consumption prices for goods and services targeting individuals and consumers.
These expectations indicate that the index has risen at its slowest pace this year, potentially providing an opportunity for the Federal Reserve to begin reducing interest rates with this decline in inflationary pressures.
Analysts indicate that the dollar index could witness a decline if the real reading turns out lower than the previous reading and lower than expected. Therefore, this could also be positive for both stocks and metals. However, if the reading is higher than expected, this may raise the chances that the Feds keeps interest rates fixed at its next meeting in June, which could positively impact the dollar and negatively hit stocks and metals, according to analysts.
Today’s data release may be accompanied by heightened volatility in the financial markets. Remember that the initial market reaction, regardless of the nature of the actual reading, may be sharp and volatile at first before the market returns to stability.
Therefore, traders should note that individuals each have different ideas and beliefs in the way they interpret the information issued. Therefore prices cannot always move 100% according to that information.
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