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Dollar Mute as Personal Spending Ticks Up, Inflation Remains Below 2% Fed Target

Dollar Mute as Personal Spending Ticks Up, Inflation Remains Below 2% Fed Target

Dylan Jusino,

Talking Points:

- Core PCE rose by 1.6% YoY in September, in line with estimates as inflation remains sluggish

- Personal spending ticks slightly above 0.9% expectation, at 1.0% last month

- Personal income falls in line with estimates

- See the DailyFX Economic Calendar for upcoming economic data and for a schedule of live coverage see the DailyFX Webinar Calendar.

See our longer-term forecasts for the US Dollar, Euro, British Pound and more with the DailyFX Trading Guides

US inflation data is helping keep the US Dollar within a narrow range this morning. The PCE deflators track overall prices changes in goods and services that are purchased by consumers, making it the Fed’s preferred gauge of inflation.

Unfortunately, again, PCE failed to reach their +2% target. In September, PCE YoY was +1.6% and core PCE was +1.3. Both figures fell in line with market expectations. Personal income was up +0.4% also in line with expectations. Notably, spending rose by +1.0% (YoY) versus +0.9% estimated.

Despite low-growth in wages the Fed remains on track to raise interest rates in December. According to CME’s FedWatch Tool, the chances of a rate hike in December are at around 98%.

Dollar Mute as Personal Spending Ticks Up, Inflation Remains Below 2% Fed Target

Source: CME Group’s FedWatch Tool

Below is a list of economic releases that has had a limited impact on the US Dollar:

- USD Personal Income (SEP): +0.4% expected as expected, from 0.2% previous

- USD Personal Spending (SEP): +1.0% versus 0.9% expected, from +0.1% previous

- USD Real Personal Spending (SEP): 0.6% versus 0.5% expected, from -0.1% previous

- USD PCE Core (YoY) (SEP): +1.3% as expected, from 1.3% previous

See the DailyFX economic calendar for Monday, October 30, 2017

Chart 1: DXY Index 15-minute Chart (October 30, 2017 Intraday)

Dollar Mute as Personal Spending Ticks Up, Inflation Remains Below 2% Fed Target

Following the release of the inflation data, the US Dollar Index traded within a narrow range. The impact of the data was limited. However, at the time that this was written DXY has traded higher reaching 94.80.

--- Written by Dylan Jusino, DailyFX Research

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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