Market Overview

US PCE Inflation stays highest since 1991

The July US income and spending statistics showed a 1.1% increase in revenue after a 0.2% increase in June and a 0.2% forecast. Such growth is positive for the economy, suggesting that it will keep growing. On the other hand, spending is more subdued, adding 0.3% last month versus 1.1% a month earlier and forecasts of 0.4% growth.

Americans will continue to save more than usual, putting aside 9.6% of disposable income in July, which is markedly above the average levels of recent years.

The Personal Consumption Price Index (PCE) is also in the spotlight as the primary indicator of actual inflation for the Fed. In July, the overall PCE climbed to 4.2% y/y and the core PCE stabilised at 3.6% y/y.  In both cases, these are highs since 1991. At the same time, the core PCE is not rising and has matched expectations, which is favourable for risk demand.

The FxPro Analyst Team

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