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After the announcement of the data, the dollar has stabilised in a relatively narrow range. The dollar appears reluctant to break free from the level in any direction, but it is currently trading up 0.05% at 103.969 after fluctuating about 104.00.
The PCE data mostly matches expectations. Stocks are up and yields are lower. Although it fell lower, the US dollar has somewhat reversed those loses. Personal income increased by a healthy 1.0%. The amount spent was modest.
The core personal consumption expenditures price index (PCE), the Fe’s favoured inflation gauge, increased by 0.4% in January as predicted.
This data is consistent with January’s consumer price index, which also showed an uptick in the pace of gains in the cost of goods and services. The overall PCE data rose 0.3% on a monthly basis, in line with forecasts from economists and accelerating from a revised increase of 0.1% in December.
The US dollar moved lower but has retraced some of those declines. Personal income grew nicely by 1.0%, and spending was moderate. Continuing claims showed some weakness with a rise to 1.905M from 1.860M last.
The overall personal consumption expenditures price index rose 0.3% on a monthly basis, in line with forecasts and accelerating from a revised increase of 0.1% in December.
Compared with a year earlier, the headline PCE index rose 2.4% in January, in line with economists’ expectations. The January annual pace was a bit slower than December’s 2.6% rate. Food prices increased 0.5%, up from the 0.1% rate logged in January.
Energy costs, on the other hand, somewhat offset that, falling 1.4% per month. Food costs increased 1.4% annually, which was a little less than in December. The annual decline in energy prices was 4.9%, which was even more than the 2.2% decline seen in December.
The markets appear to be in a holding pattern for the time being, and they may be anticipating the central bank’s actual rate choices in March, which should provide additional clarity on where to position the DXY.
