FX.co ★ Dollar Firms Ahead of PCE Inflation Data

The dollar index remained above 98.4 on Friday following two consecutive days of gains, as investors look forward to the latest Personal Consumption Expenditures (PCE) price index, the Federal Reserve's favored measure of inflation, for new insights into future policy directions. On Thursday, data revealed that weekly jobless claims declined by 14,000 to 218,000, significantly below expectations, indicating that companies are still reluctant to reduce their workforce. Additionally, revised Gross Domestic Product (GDP) figures showed an annualized growth of 3.8% in the second quarter, the fastest pace in nearly two years, fueled by robust consumer spending. While the markets continue to anticipate a quarter-point interest rate cut by the Federal Reserve in October, the overall expectations for rate decreases this year have been revised down from about 43 basis points earlier in the week to 39 basis points. The dollar index is poised for nearly a 1% weekly increase, marking its strongest performance in almost two months.