The dollar index held steady at 104.3 on Friday as traders weighed the US economic outlook amid the looming prospect of additional tariffs set to take effect next week.
Dollar little changed after PCE
The market’s focus was largely on the potential economic implications of the new tariffs, which could further disrupt trade relationships and weigh on global growth, particularly in sectors sensitive to international trade. At the same time, the release of the Personal Consumption Expenditures (PCE) report added another layer of complexity to the dollar's performance, as it highlighted rising inflationary pressures in the US. Core PCE prices increased by 0.4% month-over-month, surpassing expectations of a 0.3% rise, signaling that inflation remains a persistent concern. Additionally, personal spending grew slightly less than anticipated, adding to the uncertainty about the sustainability of consumer demand in the face of higher costs.
dollar shows a modest weekly gain
Despite Friday's stability, the dollar showed a modest weekly gain of 0.2%, reflecting some resilience in the face of ongoing economic concerns. However, the greenback remains down roughly 3% for the month, as concerns intensify that the tariffs could significantly impact the US economy, especially given the uncertainty surrounding President Trump's trade policies. These policies have raised fears of a potential slowdown in economic growth, as higher tariffs could lead to increased costs for consumers and businesses, potentially eroding the purchasing power of the dollar. Additionally, as global trade dynamics shift, the broader outlook for the US economy has become more uncertain, weighing on investor sentiment toward the dollar. Traders will continue to monitor developments in trade relations and inflation data, which could influence the dollar's direction in the coming weeks.
