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Fed Favorite Inflation figure rises 0.1% m/m as expected

No surprises from inflation that matters: the Core PCE Price Index rose 0.1% in July. Year over year, the figure remains at 1.6%, extremely stable if you wish. Personal income advanced 0.4% and consumption +0.3%, also as expected. These two saw small upwards revisions for June worth +0.1% each, in the only minor surprises in this report.

The  greenback continues looking strong and marginally extends its gains.

The Federal Reserve focuses on a specific inflation figure: the core PCE Price Index. This measure of inflation was expected to rise by 0.1% in July,  exactly like in June. Year over year, price rises have been stable at 1.6% y/y. At the same time, the US releases personal  income, which carried expectations of advancing 0.4% after 0.2% beforehand.  Personal consumption was projected to rise 0.3% after 0.4% in June.

The dollar maintained its strength following the relatively hawkish speech of Yellen in Jackson Hole, as well as the accompanying comments from Vice Chair Stanley Fischer.

The Federal Reserve has two mandates: jobs and inflation. On the former, things look positive with solid job gains.  On the latter, things are moving very slowly.

More:  Scenarios For September BoJ MPM & USD/JPY Targets – Deutsche Bank

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.