On Wednesday, global markets turned their attention to the upcoming release of the United States Personal Consumption Expenditures (PCE) Price Index for July, a key inflation gauge closely watched by Federal Reserve officials [1][2][3]. The anticipation of this data influenced major currency pairs and gold prices, with traders seeking clarity on the Fed's future monetary policy stance.
The British Pound (GBP) retreated against the US Dollar (USD), with GBP/USD testing intra-week lows near 1.3620 after failing to break resistance at 1.3660. Technical indicators showed a moderately weaker upside, with the daily RSI near 65 and MACD remaining positive, suggesting a still constructive bullish tone. A confirmed break below 1.3620 could open the path to 1.3565 and 1.3520, while a sustained move above 1.3660 would target February's peaks between 1.3716 and 1.3730. Brown Brothers Harriman’s Elias Haddad expects the PCE data to reflect the softness seen in July's CPI and retail sales, potentially giving the Fed room to stay on hold. Haddad also highlighted the importance of alternative inflation measures, such as the Dallas Fed trimmed mean PCE and Cleveland Fed median PCE, which moved closer to the Fed’s 2% target in June [1].
In North America, the US Dollar traded 0.2% higher against the Canadian Dollar (USD/CAD at 1.3870), as the Canadian Dollar underperformed amid escalating trade tensions between the US and Canada. President Donald Trump imposed 50% tariffs on Canadian goods, prompting Canadian Prime Minister Mark Carney to announce retaliatory tariffs of up to 50% on USD 20 billion of US imports, effective September 8. Danske Bank strategists noted that these tit-for-tat measures add uncertainty for businesses and risk further pressure on prices and supply chains, with the Trump administration reportedly considering additional actions. Technical analysis showed USD/CAD trading below key resistance levels, with the RSI at 41.7 indicating subdued bullish momentum [2].
Gold (XAU/USD) corrected 0.75% to near $4,620 after reaching a three-month high of $4,697, as investors grew cautious ahead of the PCE data and Federal Reserve Chairman Kevin Warsh’s upcoming speech at the Jackson Hole Symposium. The US core PCE inflation is expected to remain steady at 3.3% YoY, with monthly figures rising 0.2%, faster than June's 0.1%. DBS strategists described Warsh’s Jackson Hole keynote as a crucial credibility event for the Fed, emphasizing the challenge of balancing independence and clarity on policy without providing excessive forward guidance. Gold technicals remained bullish, with spot prices above key moving averages and Fibonacci retracement levels, though the RSI at 68.77 suggested stretched upside momentum [3].
Across the board, the market’s focus on the PCE data and Fed commentary underscores heightened sensitivity to US inflation trends and central bank signals, with currency and commodity markets reacting accordingly.
CONCLUSION
Markets are in a holding pattern ahead of the US PCE inflation data and key Fed commentary, with major currency pairs and gold showing sensitivity to potential shifts in monetary policy expectations. Trade tensions between the US and Canada add further uncertainty, particularly for the Canadian Dollar. The outcome of the PCE release and Fed signals will likely set the tone for near-term market direction.