BUZZ-COMMENT-US recap: EUR/USD firms after PCE affirms slowing US inflation
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June 28 (Reuters) - The dollar softened on Friday after PCE data showed inflation slowed in line with expectations in May, but the report appeared far from a decisive blow against the U.S. currency.
Core PCE inflation decelerated to 0.1% m/m and 2.6% y/y while the headline monthly rate was flat and the annual figure also declined to 2.6% -- all bang in line with the Reuters consensus forecasts. However, the report showed that personal income growth accelerated more than expected.
Meanwhile, Chicago PMI registered an unexpectedly robust recovery while University of Michigan consumer sentiment posted a forecast-beating rise, though inflation expectations softened.
U.S. Treasury yields mostly firmed off their lows following the Chicago PMI and University of Michigan reports, though the dollar generally lost ground slightly, except against the yen which had put in a new multi-decade high at 161.27 in Asia session trading.
San Francisco Fed President Mary Daly said she believes inflation is gradually cooling, saying the latest data showing inflation did not rise at all from April to May is "good news that policy is working."
Fed Governor Michelle Bowman said that policymakers would continue to work toward the U.S. central bank's inflation goal "on our own pace."
Treasury yields were relatively steady at the front end and 2-7bp higher in linger maturities.
The S&P 500 was 0.1% higher in New York afternoon trade, having retreated from a record high hit earlier in the day.
WTI eased 0.28%, hindered by the Energy Information Administration's Petroleum Supply Monthly, which showed a fall in demand for gasoline in April to its lowest since February.
Copper rose 1.18%, taking encouragement that the PCE inflation data could support future interest rate cuts, while some traders bought futures after they failed to break below a key support.
Gold was up 0.19% and headed for a third straight quarterly gain.
Heading toward the close: EUR/USD +0.17%, USD/JPY +0.1%, GBP/USD +0.1%, AUD/USD +0.49%.
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(Editing by Burton Frierson)
((burton.frierson@thomsonreuters.com))