Search ForexCrunch

The Fed’s most important inflation number, Core PCE Price Index, rose 0.1% m/m and 1.5% y/y, as expected. Disappointments came from personal spending, that fell 0.2% m/m contrary to an expected growth of 0.1%. Personal income also fell short of expectations with 0.2% instead of 0.3% expected. However, the employment cost index for Q3 rose by 0.7%, better than expected.

Currencies are little moved by the mixed data. Update: the dollar is now strengthening in a  slow reaction to the figures.

Update:  EUR/USD collapses below 1.25 – bounces back

The Core PCE Price Index was expected to rise 0.1% m/m in September after 0.1% in August. Y/y, the index rose 1.5% in August. This is the most important inflation measure for the Fed.

The dollar has been  stronger towards the publication, especially against the free falling yen: USD/JPY traded close to 112, EUR/USD around 1.2580 and GBP/USD around 1.60.

More data:

  • The employment cost index was expected to rise 0.5% in Q3 after 0.7% in Q2. Actual: 0.7% – good news.
  • Personal income was  predicted to rise 0.3% m/m in September. Actual: 0.2% – slight disappointment.
  • Personal spending was expected to rise 0.1% in September after 0.5% in August.  Actual -0.2% – big disappointment.

We later have the Chicago PMI which is expected to slide to 60 points and later, we have the revised consumer confidence from the  University of Michigan.

The big story of the day was the stunning decision from the BOJ to enlarge its stimulus, together with a similar move from Japan’s pension fund. USD/JPY jumped above 111 on this move.

Earlier in the week, the Fed ended its QE program and sounded bullish.