The latest Bureau of Economic Analysis (BEA) data gave us a mixed reading on consumer prices for September.
Energy, food and commodity prices fell, pushing headline inflation closer to the Fed’s 2% target. but Services inflation remains highWhich suggests that the Fed may be leaning toward keeping interest rates high for longer rather than rushing to ease them.
The core personal consumption expenditures price index — one of the Federal Reserve’s key inflation gauges — rose 0.3% for the month, in line with expectations and up slightly from August’s revised 0.2% reading. On an annual basis, the core PCE rate remained steady at 2.7%, still above the 2% target.
For broader personal consumption expenditures, which includes the more volatile food and energy costs, we saw a flat monthly increase of 0.2%. However, the annual rate decreased slightly from 2.2% to 2.1%.
In terms of income and spending, personal income rose slightly, rising from 0.2% to 0.3% as expected, while spending rose from 0.3% to 0.5%.
In addition, a decline in the personal saving rate – now at 4.6%, down from 5.2% in June – and spending gains in areas such as health care, housing and durable goods indicate Resilience of consumer activity amid moderate inflation and high interest rates.
Link to the US Personal Income and Expenditures Report for September 2024
The Ministry of Labor stated in a separate statement 216,000 jobless claimants in the week ending October 26This is lower than the 228,000 claimants the previous week and the expected number of 229,000.
Link to the Department of Labor’s weekly initial unemployment claims report
US dollar against major currencies: 5 minutes
Overlay of the US dollar against major currencies Charts from TradingView
The US dollar began to decline about an hour before the core PCE price index report and saw a limited initial reaction to the release.
However, evidence of moderating inflation, solid consumer outlook, and better-than-expected weekly jobless claims data quickly supported demand for the US dollar.
The US dollar swung higher against “riskier” currencies such as the Australian dollar, New Zealand dollar, euro and British pound before pulling back and ending the day in ranges above the lows of the US session.