The dollar is poised for its best quarter since late 2022 as Federal Reserve officials push back against the latest bout of rate-cut wagers.
Hawkish remarks from Fed Governor Christopher Waller added to speculation the US central bank is in no hurry to loosen policy and will lag other major rate-setters when it finally comes to pivot. That curbed market bets on the timing of rate cuts and helped drive the euro below 1.08 per dollar for the first time in a month.
There’s plenty coming in the final days of March that could extend the greenback’s 3% run against major peers in the past three months — the strongest appreciation since the third quarter of 2022. The Fed’s preferred inflation metric is due Friday, along with a speech by Jerome Powell.
“The market could react in quite an asymmetric fashion to tomorrow’s PCE release, with an above-consensus print prompting quite a sharp repricing,” Rabobank strategists including Richard McGuire wrote in a note to clients, referring to the core personal consumption expenditures price index, which strips out volatile food and energy components.
Treasuries fell ahead of the highly-anticipated release, driving the yield on two-year Treasury notes up as much as seven basis points to a near one-week high.
