US Core PCE Inflation Eases

London: 22 December 2023 (TraderMade): In a recent report, the US Bureau of Economic Analysis revealed that inflation in the United States, gauged by the year-over-year change in the Personal Consumption Expenditures (PCE) Price Index, increased by 2.6% in November.

This figure, below the market forecast of 2.8%, follows a revised 2.9% uptick (previously 3%) recorded in October.

The Core PCE Price Index, excluding volatile food and energy prices, registered a 3.2% rise during the same period, down from October's 3.4%. The PCE Price Index saw a marginal 0.1% decrease (On a monthly basis), while the Core PCE Price Index increased by 0.1%. Further insights from the publication disclosed a 0.4% increase in Personal Income and a 0.2% rise in Personal Spending.

Market reaction to US PCE inflation data

Despite these figures, there appears to be a muted impact on the US Dollar's performance against major currencies. As of the latest update, the USD Index showed a 0.13% decline on the day, resting at 101.1825.

Similarly,

• The EURUSD pair rose by 0.22% to 1.10356
• The GBPUSD also increased by 0.41% to 1.27424
• The USDCHF declined by 0.49% to 0.85208
• The USDJPY pair dipped 0.12% to 141.945 (Note: These exchange rates are taken at about 02:07 PM GMT, compared to yesterday's close.)

Fed Chairman Jerome Powell's recent statements indicate a willingness to consider an interest rate cut, leading to notable market reactions, including a decline in US Treasury bond yields and significant losses for the US Dollar against major currencies. Fed policymakers try to temper expectations for a policy shift in the 2024 Q1.