US Core PCE price index overview
The US Bureau of Economic Analysis will publish the latest report on core Personal Consumption Expenditures (PCE) Index, rumoured to be the Federal Reserve’s favourite inflation measure. The report would also include the personal income/spending data and is scheduled to be released at 1230 GMT. Market participants predict a rise of 0.2% m/m for May, lifting the yearly rate to 1.9% from 1.8% previous.
How could it affect the US Dollar?
A better-than-expected reading, anything above Fed’s target rate of 2%, might raise expectations for a faster Fed monetary policy tightening cycle and should give a minor boost to the buck, while a disappointing print will clearly have the contrarian effect.
Ahead of the release, the US Dollar Index (DXY) extended overnight retracement from 11-month tops and was seen trading on a soft note below the 95.00 handle. A break below 94.75 (June 29 low) is likely to accelerate the fall towards 94.38 (21-day SMA) en route to 94.18 (June 26 low).
Alternatively, a sustained move back beyond 95.05 (June 27 swing high) could lift the index back towards 95.30 (June 20 high) ahead of the 95.53 (YTD tops set on June 22).
Key Notes
“¢ US Core PCE Preview: One step closer to the Fed’s holy grail
About the US Core PCE price index
The Core Personal Consumption Expenditure released by the US Bureau of Economic Analysis is an average amount of money that consumers spend in a month. “Core” excludes seasonally volatile products such as food and energy in order to capture an accurate calculation of the expenditure. It is a significant indicator of inflation. A high reading is bullish for the USD, while a low reading is bearish.
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