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PCE prices rise less than expected
The US PCE price index rose below expectations in November, signaling easing inflationary pressures, while UK retail sales posted modest gains but fell short of forecasts. Meanwhile, Japan’s finance minister warns against currency volatility as USD/JPY nears the pivotal 160 level amid surging Treasury yields.
US PCE prices rose 0.1% in November, the slowest in six months, below market expectations.
UK retail sales edged up 0.2% in November, missing 0.4% growth expectations.
Japan’s Finance Minister warned against "rapid" currency movements but market impact was limited.
The Personal Consumption Expenditures (PCE) price index in the US rose by just 0.1% in November, below the 0.2% increase seen in the prior two months and softer than market expectations. Core PCE, the Federal Reserve’s preferred inflation gauge excluding food and energy, also climbed by 0.1%, the smallest rise in six months.
Goods prices showed almost no change, edging up less than 0.1%, while services rose by 0.2%. The data bolsters the view that inflation pressures in the US are cooling, giving the Federal Reserve more room to maintain its cautious approach to monetary policy.
UK retail sales disappoint despite growth
Retail sales in the UK rose 0.2% month-on-month in November, falling short of the 0.4% increase anticipated by analysts. This modest recovery follows a -0.7% decline in October and reflects mixed performance across sectors.
Growth in supermarket and non-food store sales provided upward momentum, but this was partially offset by weakness in clothing retail. On an annual basis, retail sales volumes grew 0.5%, though they remain -1.6% below pre-pandemic levels from February 2020.
Japan eyes the currency moves
Japanese Finance Minister Katsunobu Kato reiterated concerns about "one-sided or rapid" currency movements, emphasizing that exchange rates should align with economic fundamentals. However, his comments had little impact as the Dollar surged following the Federal Reserve’s hawkish stance and robust gains in US Treasury yields.
The 10-year US Treasury yield broke through the 4.5% resistance level and now targets the 5.0% mark, adding momentum to the Dollar’s rise. The USD/JPY pair continues to push toward the critical 160 level, intensifying pressure on Japanese policymakers to intervene.
Kato pledged “appropriate action” to address excessive volatility but stopped short of outlining specific measures. With market focus firmly on US economic resilience and Japan’s dovish monetary stance, the Dollar’s dominance is unlikely to ease in the near term.
