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The Fed’s favorite inflation figure edged up from 1.2% to 1.3%. Its it enough for the Fed? Other figures came out mixed, with spending +0.4% and income only +0.3%.

The US dollar is slightly higher after the release with 1.1165 on EUR/USD, USD/JPY ticking higher to 120.12 and similar marginal patterns in other currencies.

Update:  USD digs Dudley – talks about a hike in 2015

The data

  • Personal income: was +0.4%, exp. +0.4%. Actual +0.3%.
  • PCE Price Index m/m: was +0.1%. Actual 0%.
  • PCE Price Index y/y: was +0.3%. Actual +0.3%.
  • Core PCE Price Index m/m: was +0.1%, exp. +0.1%. Actual +0.1%.
  • Core PCE Price Index y/y: was 1.2%, exp. 1.3%. Actual +1.3%.
  • Personal Spending: was +0.3%, exp. +0.3%. Actual +0.4%.

Background

The US released a big bulk of data, with the Core PCE Price Index being the most important figure. This is the critical inflation figure, as the Fed watches it closely. A rise from 1.2% to 1.3% was expected for August. At the same time, FOMC member Bill Dudley speaks. He is a centrist and has a lot of impact.

Towards the publication, the US dollar and the Japanese yen were strengthening in a “risk off” atmosphere.

EUR/USD traded around 1.1175, GBP/USD under 1.52, USD/JPY just around 120, USD/CAD at 1.3365, AUD/USD just under 0.70 and NZD/USD at 0.6350.

In our latest podcast we explain why the dollar defies the doves

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