US Personal Consumption Expenditure (PCE) Preview (JUL 2024)
US Personal Consumption Expenditure (PCE) Price Index
The US Personal Consumption Expenditure (PCE) Price Index narrowed for the second straight month, with the headline reading falling to 2.5% in June from 2.6% per annum the month prior.
US Economic Calendar – July 26, 2024
However, the core PCE, the Federal Reserve’s preferred gauge for inflation, unexpectedly held steady at 2.6% in July while Personal Income grew 0.2% during the same period.
According to the update from the Bureau of Economic Analysis (BEA), ‘prices for goods decreased 0.2 percent and prices for services increased 3.9 percent,’ with the report going onto say that ‘food prices increased 1.4 percent and energy prices increased 2.0 percent.’
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EUR/USD Chart – 15 Minute
Chart Prepared by David Song, Strategist; EUR/USD on TradingView
The mixed results surrounding the PCE report led to a limited reaction in foreign exchange markets as EUR/USD closed the day at 1.0856. Nevertheless, EUR/USD consolidated over the remainder of the month to close July at 1.0826.
Looking ahead, the headline and core PCE are both anticipated to increase in July, and signs of persistent price growth may spur a bullish reaction in the US Dollar as it puts pressure on the Federal Reserve to further combat inflation.
However, a lower-than-expected PCE print may encourage the Federal Open Market Committee (FOMC) to pursue a rate-cutting cycle, and the Greenback may face headwinds ahead of the next interest rate decision on September 18 amid speculation for a shift in US monetary policy.
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--- Written by David Song, Strategist
Follow on Twitter at @DavidJSong
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