The financial markets experienced limited movement as investors hold their breath for the Personal Consumption Expenditures (PCE) inflation data, due this afternoon. Despite positive economic indicators from Germany, the Euro saw little benefit, while the GBP/USD pair slid further below 1.2600 during Friday's European session. The prevailing risk-off sentiment and declining U.S. bond yields offered minimal support to gold prices.
Investors are eagerly awaiting the PCE inflation figures, a key indicator of U.S. inflation and consumer spending trends. Thursday's economic data presented a mixed picture, with the U.S. Dollar Index climbing by more than half a percent, while weekly jobless claims surged due to temporary Department of Governmental Employment (DOGE) cuts. Additionally, pending home sales dropped by 4.6% month-over-month, reflecting potential weaknesses in the housing market.
The Euro failed to gain traction despite encouraging German retail sales and import prices data. Meanwhile, the GBP/USD pair continued its downward trajectory, pressured by increased demand for the U.S. Dollar as a safe haven amidst ongoing tariff concerns. President Trump confirmed his administration's plan to impose 25% tariffs on Canada and Mexico effective March 4, along with an additional 10% levy on Chinese imports.
Past experiences with President Trump's public statements have taught investors to approach his remarks with caution, often finding them to be more bluster than action. Nevertheless, the confirmation of new tariffs has heightened market apprehension, prompting investors to seek refuge in the U.S. Dollar.
The precious metals market remains subdued, with the risk-off atmosphere and falling bond yields offering limited buoyancy. Traders are keenly focused on today's PCE inflation data for further insight into the Federal Reserve's future monetary policy direction.