US dollar slackens after PCE data, the recovers

The US PCE inflation numbers were mostly in line with estimates but there were some signs of cooling inflation and that led to some dollar selling. There was also some angst about a hot number in the report in light of higher Canadian and Australian data this week.

The main headline was 0.0% m/m but the unrounded number was -0.0081%, so the slightest deflation. Core rose 0.083% m/m.

The wage number was a tad hot up 0.7% but consumption at +0.2% compared to +0.3% and with a 0.1 pp downward revision to the prior was cool.

On net, the dollar dipped and then mostly recovered. That seems about right to me; the Fed should be a tad more optimistic but we’ve already had a good CPI report for May so that should be priced in. Eyes might shift to US politics and month end now.

This article was written by Adam Button at www.forexlive.com.