Dollar Higher as Core PCE Holds at 3.3%, 5-Year Auction Gets B Grade
USD rose as core PCE held at 3.3% and a $70B 5-year note auction drew strong domestic demand. Crude settled little changed after a volatile session.
Alpha Score of 49 reflects weak overall profile with strong momentum, poor value, moderate quality. Based on 3 of 4 signals – score is capped at 90 until remaining data ingests.
The dollar rose against most major currencies on Friday as Treasury yields climbed and a fresh batch of U.S. data left the inflation picture largely unchanged.
The Australian dollar was the only Group-of-10 currency to gain ground against the greenback, rising 0.18%. The New Zealand dollar, Swiss franc and British pound were the weakest performers.
The July core personal consumption expenditures price index matched expectations at 0.2% month-over-month and 3.3% year-over-year. Headline inflation ran slightly hotter than forecast. Personal income and spending both beat consensus estimates, though real spending was unchanged from June.
Second-quarter GDP was unrevised at 1.5%, with consumer spending revised higher to 3.4% but inflation measures also revised upward. Durable goods orders rose a stronger-than-expected 1.1%, though the underlying business-investment components were softer.
The data reinforced the Federal Reserve's challenge of balancing modest growth against stubborn inflation, traders said.
Five-year auction sees strong domestic demand
The Treasury sold $70 billion of five-year notes at a high yield of 4.393%, a modest 0.2-basis-point tail above the 4.391% when-issued level. The auction earned a B grade overall.
Domestic demand was especially robust: direct bidders took 28.4% of the offering versus a 21.2% average. Indirect bidders, a category that includes international buyers, took a below-average 61.5%. Dealers absorbed just 10.05%, well below the 13.4% average.
Yields rose across the curve, with the largest increase concentrated in the five-year sector.
Crude volatile as Middle East headline risk shifts
Crude oil futures settled at $82.23 a barrel, down $0.13 or 0.16%, after swinging between $83.31 and $79.62 during the session.
Prices remain sandwiched between resistance from the 200- and 100-hour moving averages at $84.05 and $84.38, and support from a rising trendline near $79.32. Sellers remain more in control below the moving averages, but a break of either technical extreme would signal the next directional move, traders said.
Reports of progress between Iran and Oman toward restoring commercial traffic through the Strait of Hormuz removed some of the geopolitical risk premium. There is still no comprehensive U.S.-Iran peace agreement, leaving crude vulnerable to the next diplomatic or security headline.
Gold slides as dollar, yields weigh
Gold fell sharply as the stronger dollar and mostly higher yields weighed on the precious metal. It dropped $67.01, or 1.44%, to $4,590.76, after rallying from around $4,000 on July 16 to nearly $4,697 on Thursday. Profit-taking after that advance contributed to Friday's rotation lower, traders said.
Bitcoin fell 0.18% to $78,392.
U.S. stocks closed modestly lower, with only the Nasdaq 100 bucking the broader trend to finish in positive territory. The session was a modest risk-off affair: the dollar strengthened against most major currencies, gold moved sharply lower and crude settled little changed after a volatile day.
Rest in peace, Dolly Parton, who died at the age of 80. She wanted to be remembered for how she lived and for the difference she made.
In markets next week, traders will focus on the August payrolls report due Friday and the next Fed meeting on Sept. 19-20.
Drafted by a large language model from the source reporting linked above, then screened by automated publishing checks. It is not read by a journalist before publication. Some articles cite our Alpha Score. Verify prices and figures against the original source. Educational coverage, not personalized advice.