Growth and Labor Market Support Dollar
The US economy expanded at an annualized rate of 3.8% in Q2, beating both the prior estimate and the 3.3% forecast. The data highlighted resilience in consumer spending and business investment, boosting dollar demand. Meanwhile, initial jobless claims fell to 218K in the week ending September 20, below both expectations of 235K and the revised 232K prior figure, signaling continued labor market strength.
Fed Officials Deliver Mixed Signals
Despite the upbeat data, Fed commentary remained divided. Kansas City Fed President Jeffrey Schmid argued for cuts to protect employment, while Chicago Fed President Austan Goolsbee warned against easing too soon given inflation trends.
Markets are now pricing in roughly 43 basis points of cuts across the final two Fed meetings this year, though policymakers stress decisions will depend on upcoming data.
PCE Data to Guide Market Outlook
Attention now turns to August’s Personal Consumption Expenditures (PCE) report. Consensus sees headline PCE at 2.7% YoY and core at 2.9%. A weaker print could revive rate-cut bets, while stronger figures may support further dollar gains.
