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US core PCE seen accelerating ahead of Fed focus at Jackson Hole
The July core PCE is expected to rise 0.2% month over month, and CME FedWatch shows September hike odds have fallen to 38% from 55% last month.
Ahead of the US Bureau of Economic Analysis release for July, financial markets are bracing for new data tied closely to Federal Reserve policy, with the PCE Price Index expected Wednesday at 12:30 GMT.
FXStreet said the core PCE measure, which strips out seasonal food and energy effects, is forecast to accelerate to 0.2% month over month in July from 0.1% in June, while staying at 3.3% year over year. The broader PCE release also comes alongside the first estimate of Q2 GDP and Durable Goods Orders, which could influence how much inflation data moves currency expectations.
FXStreet added that the reaction to the inflation numbers is likely to be muted compared with the later catalyst, the Jackson Hole central bankers meeting on Friday. The outlet cited expectations that Fed Chairman Kevin Warsh will provide insight into near term policy even as he is described as reluctant to give forward guidance.
According to FXStreet, strategist commentary at DBS Bank frames Jackson Hole as a key test given Warsh’s stance on forward guidance and the potential for market volatility. The piece also said futures markets are pricing a 38% chance of a quarter point hike in September, down from 55% one month ago, using CME FedWatch Tool data.