USD weakened against other major currencies in the European session on Wednesday as investors waited for a series of key U.S. economic indicators, including the Federal Reserve’s preferred inflation metrics, later in the day, which could cause a recalibration of rate cut expectations.
The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, fell 0.55% from the previous close to 106.42.
The Fed's favoured inflation measure for October - the core PCE price index - is scheduled to be published at 13:30 GMT, alongside weekly jobless claims statistics and the second estimate of the third quarter GDP growth rate.
Economists predict today’s data will show the core PCE price index increased 2.8% YoY in October, accelerating from 2.7% YoY in September, while the GDP grew 2.8% QoQ in the third quarter, unrevised compared to the advance estimate.
Ahead of the data, markets see a 66.5% probability of a quarter-point rate reduction when the Fed’s policymakers gather for their final meeting of 2024 next month.
Yesterday’s release of the minutes from the U.S. central bank’s November 6-7 policy meeting indicated that officials will continue to monitor the implications of incoming information for the economic outlook while assessing the appropriate stance of monetary policy.