Fed policymakers on the radar, as US PCE inflation looms

■Commentary from Fed officials on interest rates and inflation outlook will be closely scrutinized this week.

■Fedspeak could help reverberate the market expectations for a September rates on-hold decision.

■Fed rate outlook could significantly impact the value of the US Dollar across its major rivals.

Federal Reserve (Fed) policymakers are set to make their scheduled appearances on Tuesday, as full markets return, anticipating the release of the high-impact US PCE inflation due later this week.

Meanwhile, the US Dollar remains under moderate selling pressure so far this week, extending Friday’s downside, fuelled by an unexpected easing in UoM 5-year Consumer Inflation Expectations for May. The reading came in at 3.0% , down from April’s 3.1% and below the market consensus of 3.1%. Markets are pricing in a 50% probability that the Fed will hold interest rates in September, according to the CME Group’s FedWatch Tool.

In the past week, Fed policymakers leaned in favor of a cautious stance on the inflation outlook, raising concerns amongst the market participants on potential Fed rate cuts this year. Therefore, the upcoming speeches by Fed Governor Michelle Bowman and Cleveland Fed President Loretta Mester in the Asian session will be closely scrutinized by markets for gauging the path forward on interest rates.

Both these officials are due to participate in a panel discussion titled "Policy Panel Discussion" at the Bank of Japan - Institute for Monetary and Economic Studies, in Tokyo. The event is scheduled at 04:55 GMT.

Later in the American session, Fed Governor Lisa Cook and  San Francisco Fed President Mary Daly will take up the rostrum to share their thoughts at a panel discussion titled "AI and the Economy" at an event hosted by the Federal Reserve Bank of San Francisco.