Will the CPI Crash the USD?
The most impactful releases of this week will fill the market with volatility and sharp movements. Be ready to take action!
Can Core PCE Influence USD?
What will happen?
The US Bureau of Economic Analysis will publish Core Personal Consumption Expenditures (PCE) on March 31, at 15:30 MT. This monthly release comes out 30 days after the month ends. The PCE indicator differs from the core CPI as it measures only goods and services consumed by individuals. Prices are weighted according to the total cost of a product. It provides essential information about consumer behavior.
How will USD react?
Inflation in the US keeps increasing due to geopolitical news. Moreover, logistical problems caused by the boycott of Russian goods and resources accelerate the US market prices’ rise. As a result, the Federal Reserve has to consider faster rate hikes. Expectations of such policy push the USD up. The US dollar index is trading near the highest levels since May 2020.
On February 25, PCE rose by 0.5%, the same as predicted. However, the release was overshadowed by the beginning of the Russian-Ukrainian conflict. Due to this fact, the currency fluctuations weren’t significant.
How to trade on the US core PCE release?
As the PCE index is crucial, it is likely influence gold and the USD pairs. Gold is considered as a hedge against inflation, but PCE high numbers increase the chance of rate hikes. Thus, the metal may fall against the USD.
- If the actual numbers beat expectations, then the USD will go up, and gold (XAUUSD) will fall.
- On the contrary, lower numbers will make gold rise.
Check the Economic Calendar.
Instruments to trade: XAUUSD, EURUSD, USDCAD, USDCHF.
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