July PCE data shows inflation above forecasts, strengthening the USD and pushing the yen lower after earlier gains.
The Japanese Yen erased earlier gains against the US Dollar after July’s Personal Consumption Expenditures (PCE) Price Index rose 0.2% month-over-month, exceeding the 0.1% forecast. Annual headline inflation held at 3.7%, above the expected 3.6%.
Core PCE, the Federal Reserve’s preferred inflation gauge, matched forecasts at 0.2% MoM but accelerated from June’s 0.1% rise. Annual core inflation remained steady at 3.3%, in line with expectations. The US Dollar Index (DXY) climbed 0.25% to 99.17.
Markets now price a 65% chance of unchanged Fed rates in September. Focus shifts to Fed Chair remarks at the Jackson Hole Symposium for policy clues.