Market confidence for the Federal Reserve (Fed) tightening monetary policy remained strong despite readings of US inflation data last week showing slower -than -expected growth.
The US personal consumption expenditure (PCE) price index, excluding volatile food and energy components, rose 0.5% after rising 0.7% in April.
However, in the 12 months to May, the core PCE price index, considered the Fed’s favorite measure of inflation, posted its biggest gain since April 1992 with an increase of 3.4%.
The US dollar, which initially depreciated, traded stronger again in the Asian session today, where the dollar index traded around 91.80 against most major currencies.
While inflation is expected to slow by the end of the year, signs of a tight labor market (a labor market where employers compete for workers) have left many investors worried about wage-driven price pressures.
Among the key economic indicators this week is, the publication of the US NFP jobs report on Friday which is expected to add 675,000 employees in June.
Meanwhile, the pound traded under pressure as the country struggled to control the surge in Covid-19 cases, especially after UK Health Minister Matt Hancock resigned and was replaced by former Finance Minister Sajid Javid.
The UK recorded 18,720 new cases of infection on Saturday, the highest figure ever recorded since February 5, and recorded 23 deaths.
