Although the action in foreign exchange markets remain subdued on Easter Monday, Gold gathers bullish momentum following the long weekend. The US economic docket will feature February Construction Spending data and the ISM Manufacturing PMI report for March later in the day. The Bank of Canada will publish its Business Outlook Survey.
The data published by the US Bureau of Economic Analysis on Easter Friday showed that the Personal Consumption Expenditures (PCE) Price Index and the core PCE Price Index both rose 0.3% on a monthly basis in February. While participating in a discussion at the Macroeconomics and Monetary Policy Conference in San Francisco late on Friday, Federal Reserve Chairman Jerome Powell said that the US economy was strong without question and added that the latest core inflation numbers showed "real progress." The US Dollar Index stays in a consolidation phase near 104.50 in the European morning after closing the previous week marginally higher.
After rising nearly 3% in the previous week, Gold extended its rally at the beginning of the week and reached a new all-time high above $2,260. In the meantime, the benchmark 10-year US Treasury bond yield struggles to gain traction and stays near 4.2%, allowing XAU/USD to continue to stretch higher. Following Powell's comments and PCE inflation data, the CME FedWatch Tool shows that investors are pricing in a nearly 70% probability that the Fed will lower the policy rate by 25 basis points in June.
Gold price stands tall near record high as US PCE data reaffirms June Fed rate cut bets.
EUR/USD closed flat on Friday and started the new week in a quiet manner. The pair was last seen fluctuating in a narrow channel slightly below 1.0800.
GBP/USD fell about 1% for the second consecutive time last week but stabilized above 1.2600.
USD/JPY continues to move sideways below 151.50 early Monday. Japanese Finance Minister Shunichi Suzuki offered some verbal intervention earlier in the day, saying that the speculative moves are seen behind the recent weak Japanese Yen and added that he will not rule out any steps to respond to disorderly foreign exchange moves.
