PCE inflation cools down, causing the US dollar to fall in response, but still maintains a monthly cumulative increase for the year. Bitcoin soared over 60% in the first quarter

This Friday is Good Friday before Easter, with stock markets and bond markets in Europe and the United States closed. The Chicago Mercantile Exchange (CME) and Intercontinental Exchange (ICE) suspended trading in crude oil, precious metals, foreign exchange, stock indices, and U.S. Treasury futures for the whole day.

On this quiet trading holiday Friday, the fluctuations of major currencies in the foreign exchange market are relatively small. The most notable development is that the U.S. core PCE price index, a key inflation indicator favored by the Federal Reserve, cooled as expected in February, causing the U.S. dollar index to quickly reverse from gains to losses.

The year-on-year and month-on-month growth rates of the core PCE price index for February, released on Friday, both slowed compared to January. The year-on-year growth rate of 2.8% is the lowest since March 2021, while the month-on-month growth rate of 0.3% is lower than the highest growth rate of 0.5% seen in the past year after an upward revision in January. Following the stronger-than-expected growth in February CPI and PPI announced earlier this month, the cooling of the core PCE index may relieve pressure on the Federal Reserve to cut interest rates. Some analysts suggest that the PCE data may strengthen traders' bets on a Fed rate cut.

Subsequently, Federal Reserve Chairman Powell stated that the February core PCE index was "broadly in line with expectations," reiterating that the Fed is not in a hurry to cut rates. He mentioned that the Fed hopes to see more "positive" inflation data to boost confidence, and reiterated the expectation that inflation will continue to decline on a "bumpy path." Wall Street analysts commented that there has not been much change in the overall information received so far, with the February inflation data meeting the Fed's expectations and aligning with the view that the Fed will act once more data is available. The current mode for the Fed is that as long as they gain more confidence and receive a few more months of data, they are still willing to cut rates by mid-year.

As the U.S. dollar index turned lower, non-U.S. currencies generally hit daily highs on Friday, with the euro moving away from its low point in over a month and the yen avoiding the danger of falling below 152.00, the lowest level since 1990. Although the U.S. dollar index retreated from its high in mid-February, the upward trend for the week and the month remains intact, maintaining the momentum of monthly gains since entering 2024. Bitcoin's rebound lasted only one day on Thursday, falling back below $70,000 during the session.

The unexpected rate cut by the Swiss National Bank this month sparked expectations of a global race to cut interest rates by central banks. Some analysts believe that the recent rise in the U.S. dollar is mainly driven by selling in developed market currencies such as the Swiss franc and the yen. Even as central banks around the world begin to cut rates, the actual yield in the United States may still remain relatively high, as the Fed tends to be more cautious than current market expectations.

Non-U.S. Currencies Hit Daily Highs After PCE, Euro Moves Away from Over One-Month High

The ICE U.S. Dollar Index (DXY), which tracks the exchange rates of six major currencies against the U.S. dollar, rose in early Asian trading and maintained its gains until pre-European trading, breaking above 104.60. It approached the high near 104.70 reached on February 15, rising by over 0.1% intraday. European stocks turned lower in early trading, and the U.S. announced the PCE price index, causing a rapid decline from nearly 104.60 before the data release to below 104.40, hitting a daily low. The index fell by over 0.1% intraday but gradually erased most of the losses later on In non-dollar currencies, after the US PCE data was released, the Japanese yen quickly extended its gains, with the USD/JPY falling below 151.20 to hit a new daily low, down more than 0.1% intraday; the EUR/USD quickly rose above 1.0800 to hit a new daily high, up nearly 0.2% intraday, breaking away from the intraday low below 1.0770 set in the early European session and the low since February 20 for two consecutive days; the GBP/USD extended its gains, rising above 1.2640 to hit a new daily high, up nearly 0.2% intraday, but did not approach the low since February 20 set last Friday below 1.2580.

However, during the usual US stock trading session, the Japanese yen, euro, and pound gradually gave back their gains. By the time of the usual US stock market close, the euro and pound were slightly up intraday, while the USD/JPY was slightly down intraday, above 151.30, without approaching the high of 152.00 set on Thursday, the highest since the mid-1990s.

Offshore Chinese Yuan (CNH) against the US dollar fell in the early Asian session after hitting a new daily low of 7.2643, but quickly rebounded and maintained its upward trend. After the US PCE data was released, the gains expanded, and during the usual US stock market early session, it rose to 7.2536 to hit a new daily high, up 103 points from the low, without continuing to fall towards the intraday low below 7.28 set on Monday since November 13, 2023.

Bitcoin falls below $70,000 in intraday trading in March, still up over 10%

Bitcoin (BTC) rose above $71,000 in the early Asian session, hitting a new daily high, but quickly fell below $71,000. During the usual US stock market early session, the price fell below $70,000, dropping below $69,200 and some platforms fell below $69,100 to hit a new daily low, falling by about $2,000 from the high, down nearly 3%, failing to continue to approach the high set on March 14 above $71,600 before the turnaround on Wednesday.

According to CoinMarketCap data, by the time of the usual US stock market close, the spot trading price of Bitcoin (BTC) was above $69,600, down over 1% in the past 24 hours, up over 9% in the past seven days, up over 12% in March, and up over 60% in the first quarter of the year