The United States (US) Bureau of Economic Analysis (BEA) is expected to publish the Personal Consumption Expenditures (PCE) Price Index data for July on Wednesday, at 12:30 GMT.
The PCE Price Index is one of the most relevant indicators for financial markets, as it is the Federal Reserve’s (Fed) gauge of choice to assess inflationary trends and, therefore, to decide its monetary policy
On Wednesday, the US PCE Price Index release will be accompanied by the first estimate of Q2 Gross Domestic Product (GDP) and Durable Goods Orders, which might tame the Forex impact of inflationary data. Anticipating the US PCE: Insights into the Federal Reserve’s key inflation metric In general terms, PCE inflation data for July is expected to reveal that price pressures remain high, well above the Fed’s 2% target, buoyed by high energy prices, with the Middle East conflict in a labyrinth, with no end in sight. The core PCE Price Index – the most relevant figure from a monetary policy perspective, as it strips the seasonal influence of food and energy prices – is seen accelerating to 0.2% month-over-month (MoM) in July, from 0.1% in June, and remaining steady at 3.3% since July last year.
These are still levels below May’s 3.4% YoY peak, but also well above the Fed’s target. Investors are likely to analyse these figures carefully to get some clues about the US central bank’s monetary policy. The reaction to the data, however, is likely to be muted.