Why the US Dollar Dropped After Latest Inflation News

The latest numbers on inflation in the US show that prices are still going up, but not as fast as some people thought. The Personal Consumption Expenditures (PCE) Price Index, which is a big deal for the Federal Reserve, went up by 2. 3% in May. That's a tiny bit higher than the month before, but it's not a huge jump. The core PCE, which leaves out food and energy prices because they change a lot, went up by 2. 7%. That's a bit more than the 2. 6% from April. So, prices are still rising, but not super fast. People's income and spending both went down a little bit last month. Income dropped by 0. 4%, and spending fell by 0. 1%. That's not great news for the economy, but it's not a total disaster either. When this news came out, the US Dollar got a little weaker. It lost about 0. 25% of its value against other big currencies. The dollar was the weakest against the British Pound. The Federal Reserve is watching these numbers closely. They want to see how inflation is doing before they decide to cut interest rates. Right now, the market thinks there's a pretty good chance they'll cut rates in September, but not in July. Some experts think that the core PCE numbers will stay pretty much the same for a while. They don't expect a big jump in prices. But if the numbers come in higher than expected, it could make the dollar stronger. If they come in lower, the dollar might get weaker.