PCE Up Next
The big data focus for today is the US PCE release. The PCE figure is used by the Fed as its core gauge of inflation and so attracts a lot of attention. Given the current battle between the market’s inflation expectations and the Fed’s own view on inflation, today’s release is likely to attract even more attention. Last week, the Fed upgraded its inflation forecasts and revised higher its dot plot forecasts. However, since then Fed’s Powell has pushed back against inflation expectations once again, seeing the Dollar give up some of its post-FOMC gains.
With this in mind, today’s PCE data has the potential to either spark a further push higher in USD, or turn the greenback further lower. The market is looking for a 0.6% reading, down from the prior month’s 0.7% reading. Given the low bar, if data surprises to the upside there is room for USD to spike.
Where to Trade US PCE?
USDJPY is currently testing the 110.92 level once again following a slow grind back up to the level. The rally higher has been accompanied by heavy bearish divergence on both the RSI and MACD indicators. If today’s data fails to ignite any USD upside, there are downside reversal risks from current levels targeting 109.63 first and 107.91 below that. Alternatively a data beat today could see USDJPY breaking out above current highs targeting 11.70 next.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.