Dollar Waits on Core PCE Data and Warsh Remarks

The US dollar has been trading in a narrow range as investors await key economic data and Federal Reserve remarks, according to OCBC strategists.

The Core Personal Consumption Expenditures (PCE) price index, the Federal Reserve's preferred inflation gauge, is scheduled for release later this week. The annual Core PCE rate currently stands at 2.8%, still above the Fed's 2% target.

A higher-than-expected reading could reinforce the case for maintaining elevated interest rates, which typically supports the US dollar. Conversely, a softer figure might fuel expectations of rate cuts, potentially weighing on the currency.

Federal Reserve Governor Christopher Warsh is also scheduled to speak this week, and his comments will be scrutinized for any hints about the central bank's thinking on inflation, employment, and interest rates. OCBC analysts emphasize that Warsh's remarks could provide additional clarity on the Fed's reaction function, especially in light of recent mixed economic data.