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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 modest m/m rise of 0.1% for the core PCE price index in June, with the yearly rate holding steady at 2.0%.

How could it affect USD/JPY?

Ahead of today’s data, the pair got a minor boost from the BoJ latest monetary policy decision and has managed to break out of a four-day-old narrow trading range, pointing to a bullish set-up. A better-than-expected print should assist the pair to continue scaling higher and aim towards reclaiming the 112.00 handle before heading towards the 112.25 supply zone.  

Alternatively, the reaction to a negative reading is expected to remain muted ahead of today’s the latest FOMC monetary policy update on Wednesday and the keenly watched US monthly jobs report on Friday. Hence, any retracement slide is likely to find support near the 111.20 horizontal zone and is followed by a strong horizontal support near the 110.75-65 region.  

Key Notes

   “¢    US: Core PCE inflation likely to slow to 0.06% in June – Nomura

   “¢    USD/JPY downward pressure alleviated above 111.80 – UOB

   “¢    Trade idea: USDJPY basing around 111 – Potential long opportunities!

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.