U.S. Dollar Declines As PCE Data Cements Rate Cut Bets

(RTTNews) - The U.S. dollar moved down against its major counterparts in the New York session on Friday, as the nation's consumer prices increased in line with economist estimates in April, raising the possibility of a rate cut from the Federal Reserve in September.

Data from the Commerce Department showed that the personal consumption expenditures price index rose by 0.3 percent for the third straight month in April, matching economist estimates.

Meanwhile, the report said the core PCE price index, which excludes food and energy prices, crept up by 0.2 percent in April after rising by 0.3 percent in March. Economists had expected another 0.3 percent increase.

The annual rates of growth by the PCE price index and the core PCE price index were both unchanged from the previous month at 2.7 percent and 2.8 percent, respectively. The readings matched expectations.

The readings on inflation, which are said to be preferred by the Federal Reserve, were included in the Commerce Department's report on personal income and spending.

The report said personal income rose by 0.3 percent in April after climbing by 0.5 percent in March. The increase came in line with economist estimates.

Treasury yields retreated, with the yield on the benchmark ten-year note falling to 4.49 percent.

The odds of a rate cut in September edged up above 50 percent following the data.

The greenback fell to a 3-day low of 1.0882 against the euro and a 2-day low of 1.2766 against the pound, from yesterday's close of 1.0831 and 1.2731, respectively. The greenback is seen finding support around 1.10 against the euro and 1.29 against the pound.

The greenback touched 0.9002 against the franc, its lowest level since May 16. At yesterday's close, the pair was valued at 0.9033. The greenback is likely to face support around the 0.89 region, if it falls again.

The greenback weakened to 156.55 against the yen from Thursday's close of 156.80. On the downside, 147.00 is likely seen as its next support level.

The greenback dipped to 3-day lows of 1.3619 against the loonie, 0.6672 against the aussie and 0.6165 against the kiwi, from yesterday's closing values of 1.3680, 0.6633 and 0.6114, respectively. The currency may locate support around 1.34 against the loonie, 0.68 against the aussie and 0.63 against the kiwi.