investingLive Americas FX news wrap 30 Sept: Softer PCE fails to hold yields down; Dow ends September at June lows

Softer inflation gave markets some breathing room early Wednesday. But by the end of the session, Treasury yields were higher, the dollar had strengthened against most major currencies, and the stock market’s gains were concentrated in the Nasdaq indices. The economic picture was mixed. August PCE inflation came in below expectations, second-quarter growth was revised higher, and a larger goods trade deficit contributed to a sharp downgrade in the Atlanta Fed’s third-quarter growth estimate. For traders, the message was that the Fed has room to wait, but inflation and growth risks have not disappeared. Dollar gains against most major currencies The dollar finished the supplied late-session snapshot higher against six of the seven major currencies. Its biggest gain came against the Australian dollar. Sterling was the exception, rising 0.26% against the greenback. EURUSD: 1.1329, −0.10%. USDJPY: 157.39, +0.07%. GBPUSD: 1.3263, +0.26%. USDCHF: 0.8353, +0.19%. USDCAD: 1.4232, +0.31%. AUDUSD: 0.6943, −0.57%. NZDUSD: 0.5631, −0.14%. The dollar’s recovery shows that the initial reaction to softer inflation did not define the entire session. Higher Treasury yields provided a supportive backdrop later in the day. Treasury yields reverse the early decline Yields initially moved lower after the inflation report, but the supplied end-of-day snapshot showed increases across the four key maturities: 2-year: 4.8953%, +0.63 basis point. 5-year: 5.0913%, +2.83 basis points. 10-year: 5.2912%, +3.62 basis points. 30-year: 5.6309%, +3.69 basis points. Longer-term yields rose more than the two-year yield, steepening the curve. That matters because longer-term borrowing costs can remain elevated even when traders become less certain about an immediate Fed hike. Softer PCE helped the Fed’s near-term outlook. It did not deliver lasting relief from higher market interest rates. U.S. stocks close mixed The Nasdaq indices held modest gains, while the Dow, S&P 500 and Russell 2000 finished low