US dollar eyes PCE inflation data after CPI scare
XM Group | Feb 26, 2024 10:13AM ET
- Core PCE price index to be crucial for markets amid sticky inflation fears
- Income and consumption to be watched too as US economy stays hot
- But can further upside surprises boost the dollar on Thursday, 13:30 GMT
Will PCE gauge ease or fuel inflation worries?
Even though the Fed has made great progress in its bid to bring inflation in the US under control, the next phase to get it all the way down to 2% is proving to be a little more difficult. The CPI measure of inflation has been stuck above 3.0% for some time now and core CPI was unchanged at 3.9% in January.
A slowdown in consumer spending could ease concerns about an overheating economy and so would likely be welcomed by equity markets, though not so much by the dollar. However, markets would not react as positively if there’s a sudden deterioration in consumption as investors are positioned for a soft landing in the US economy. Anything that questions that view would weigh on risk sentiment.
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