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How to Track Inflation NumberHow to track inflation number? When the Fed mentions their 2% inflation target, are they referring to the commonly published CPI that we often read about, or are they referring to Core CPI or Core PCE? 10-Year Yield Futures Ticker: 10Y Minimum fluctuation: 0.001 Index points (1/10th basis point per annum) = $1.00 Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com Trading the Micro: www.cmegroup.com
ECONOMICS:USCPCEPIACLong
by konhow
1
Japanese yen soars as Tokyo Core CPI falls to 2%The Japanese yen is sharply higher on Friday. USD/JPY is trading at 143.49 in the European session, down a massive 1.1%. Tokyo Core CPI, which excludes fresh food, slowed to 2% in September, down from 2's.4% in August and matching the market estimate. The drop was largely driven by the resumption of government subsidies for utility bills. The inflation reading indicates that Japan is on track to hit the Bank of Japan’s target of sustainable 2% inflation and the yen has responded with sharp gains today. This reading will support the case for further rate hikes, although that’s unlikely until December or early next year. Governor Ueda said this week that the BoJ is not in any rush to hike rates and that the focus will be on services prices data for October, which won’t be released until November, too late for the October 31 meeting. Wages have been rising but it remains to be seen if this will translate into higher services inflation. If it does, there will be pressure on the BoJ to raise rates at the December meeting. The week wraps up with US Core PCE Price Index, which is considered the Fed’s preferred inflation indicator. The index has hovered at 2.6% for the past three months and is expected to tick up to 2.7% for August. Monthly, the Core PCE is expected to remain at 0.2%. An unexpected reading could shake up the US dollar and the rate-cut odds for the Fed’s November meeting. The odds of a 50-basis point cut have slipped to 47%, down from 54% a day earlier, according to the CME’s FedWatch tool. USD/JPY faces weekly resistance lines at 147.58 and 150.66 There is support at 142.67 and 140.84
by OANDA
AUD/USD – Australian retail sales flat, Aussie shrugsThe Australian dollar continues to have a quiet week. AUD/USD is trading at 0.6804 in the European session, up 0.09% today at the time of writing. Consumer spending in Australia has been weak, which has chilled economic activity. Retail sales for July didn’t provide any relief with a reading of zero, shy of the market estimate of 0.3% and well off the June gain of 0.5%. Consumers continue to feel squeezed by elevated interest rates and the high cost of living. The weak economy and a cooling labor market are making consumers even more cautious about discretionary spending. Will today’s soft data prod the Reserve Bank of Australia to consider a rate cut? The RBA is frustrated with the slow decline in inflation - Governor Bullock has said that the central bank is unlikely to cut for six months and RBA members have been discussing a possible rate hike at recent meetings. The markets are marching to a different tune and have priced in a rate cut in November with more cuts early next year. The remaining tier-1 events ahead of the Sept. 24 policy meeting are GDP and the employment report and both releases will be important factors in the rate decision. If these numbers are weaker than supported, it would support the case for a rate cut before year’s end. The week wraps up with the US Core PCE Price index, considered the Federal Reserve’s preferred inflation indicator. The markets are expecting a small increase in July – from 2.5% to 2.6% y/y and 0.1% to 0.2% m/m. A small move is unlikely to concern the Fed, which has shifted its focus to the weakening labor market now that the battle with inflation is largely over. AUD/USD is testing resistance at 0.6808. Above, there is resistance at 0.6822 0.6776 and 0.6754 are providing support
by OANDA
FOMC FORWARD GUIDANCE SINCE 2018 w/SPXThe chart provided visually represents the forward guidance issued by the Federal Open Market Committee (FOMC) alongside the performance of various key economic indicators and market indices. The FOMC forward guidance serves as a crucial tool for signaling the Federal Reserve's monetary policy stance and future intentions, thereby influencing market expectations and economic behavior. By examining the interplay between FOMC forward guidance and these key economic indicators, investors, policymakers, and analysts can gain insights into the likely direction of monetary policy and its potential impact on financial markets and the broader economy.
SP:SPX
by koyking
HEADLINE/CORE PCE - Inflation dips down into to historical normsU.S. Headline PCE - Lower than Expected ✅ Actual: 2.64% Exp: 2.8% Prev: 3.0% US Core PCE - Lower than Expected ✅ Actual: 3.16% Exp: 3.4% Prev: 3.5% As highlighted on my recent Macro Monday post Core PCE is the Feds favorite metric for measuring inflation (as it excludes volatile price swings from the likes of energy and food and gives a good indication of the underlying inflation trend). PCE is also considered more comprehensive and a more consumer led report than CPI which focuses more on a lessor altered fixed basket of goods (compared month to month). CORE PCE Core PCE has come in this month lower than expected at 3.16% (expected 3.4%). This is great news for the fight against inflation. HEADLINE PCE Separately, Headline PCE has just dipped under the 3% level down to 2.64% which is getting very close to the Federal Reserves long term target of 2%. Historical Core PCE Norms On the chart you can see that since 1990 the typical Core PCE range is between 1 - 3% (red dotted lines on chart). We are slowly getting back down into this more historically moderate level. A sub 3% Core PCE next month would be ideal and demonstrate further easing of inflationary pressures. For the full breakdown of the Core and Headline PCE and to know the differences between PCE and CPI, please review this weeks Macro Monday released earlier this week. PUKA
ECONOMICS:USCPCEPIAC
by PukaCharts
$SPYCore PCE which is the Fed's favored methods in evaluating inflation just hit the wires and came in softer than expected, but still above the Fed's ideal. T&S is reflecting that pre-market traders are enjoying the news, albeit on low volume. It is the end of the quarter heading into the weekend so todays price action will be important, lets take a look at some levels The majority of yesterdays darkpool action occurred below the bid, the areas with the most significant orders occurred at 401.27 & 403.64, we will look at these as local supports. bulls need a break above 409, bears need a break below 400. these are the potential scenarios I will look for today : long: - break above PM high, retest & hold - dip to yday's darkpool prints & hold short: - pop to PM high & fail - break below yday darkpool prints, retest & fail resistances: 405.22, 407.20, 409 supports: 403.64, 401.27, 400, 398, 396.62,393.69
AMEX:SPY
by runNgun
AUD/USD rebounds ahead of RBAAUD/USD has started the trading week with strong gains. The Aussie is trading at 0.6447, up 0.67%. Is the nasty slide over? The Australian dollar is coming off a third straight losing week. September was a disaster, as AUD/USD plummeted 6.4%. The escalation in the war in Ukraine, which has sapped risk sentiment, and the aggressive Federal Reserve have dampened market appetite for the risk-related Australian dollar. The RBA meets on Tuesday, and Bank members are widely expected to deliver a fifth consecutive hike of 50 basis points, which would take the benchmark rate to 2.85%. After that, the RBA may lower gears to 25bp moves. Governor Lowe has signaled that he would like to shift to 25bp hikes at some point, which would help guide the economy to a soft landing and avoid choking off economic growth. However, there is no indication that inflation has peaked, and soaring inflation was the primary reason for the RBA's sharp rate-hike cycle. The next inflation report will be released in late October, with the RBA November meeting just one week later. It's a safe bet that the size of the rate hike in November will depend to a large extent on that inflation report. In the US, the Fed may make a U-turn in policy before the end of the year, depending on the strength of the economy. The data can be conflicting, which was the case on Friday. The Fed's preferred inflation indicator, the Core PCE Index, rose 4.9% in August, up from 4.7% in July and above the consensus of 4.7%. At the same time, the University of Michigan sentiment index showed that inflation expectations for 5-10 years ticked lower to 2.8%, down from 2.7%. In the meantime, the Fed's hawkish stance has fuelled the US dollar's upswing. AUD/USD has support at 0.6450 and 0.6363 There is resistance at 0.6598 and 0.6685
by OANDA
USD/JPY stabilizes after hitting 139The Japanese yen is in positive territory today after starting the week with sharp losses. USD/JPY is trading at 138.22, down 0.34%. Japan releases a host of events on Wednesday, including retail sales and consumer confidence. Retail sales for July is expected to come in at -0.5% MoM, following a 1.4% decline in June. Consumer confidence remains weak, with a July estimate of 31.0, following the June read of 30.2. Japanese consumers are in a sour mood and nervous about the economy, and it's no surprise that they are holding tight to the purse strings as inflation continues to rise. The yen remains under pressure and took it on the chin after Fed Chair Powell's speech at Jackson Hole on Friday. Powell's brief speech went straight to the point, pledging to continue raising rates until inflation was brought under control. Powell pointedly said that one or two weak inflation reports would not cause the Fed to U-turn on its tightening, a veiled reference to the market euphoria which followed the July inflation report, which was lower than the June release. With the equity markets taking a tumble after Powell's speech, it appears that investors have finally gotten the Fed's hawkish message. Powell's speech removed any doubts about the Fed's plans to continue raising rates, but the size of the increases will depend not just on inflation, but also on other economic data. Overshadowed by Jackson Hole, US Personal Income and Spending data was weaker than expected. As well, the Core PCE index, the Fed's preferred inflation indicator, fell to 6.3%, down from 6.8% and below the forecast of 7.4%. If Friday's non-farm payrolls report is weaker than expected, it would be a clear indication that the sharp increase in rates is having its desired effect and the economy is slowing. In such a scenario, Fed policy makers may be more inclined to raise rates at the September meeting by only 50 basis points, rather than 75bp. USD/JPY is testing support at 1.3822. The next support line is at 137.01 1.3891 and 1.4012 are resistance lines
by OANDA
Euro rises to parity as ECB hints at 75bp hikeEUR/USD has edged higher today and is trading at the parity line. In the North American sesssion, EUR/USD is trading at 1.0019, up 0.57%. The US dollar has posted sharp gains against the major currencies, as Fed Chair Powell's hawkish speech at Jackson Hole left no doubt that the Fed will continue to tighten rates in its titanic battle with surging inflation. The euro, however, bucked the trend and posted strong gains on Friday but ultimately pared these gains, before moving higher once again today. The upward movement has been driven by hawkish comments at Jackson Hole from senior ECB members, including Isabel Schnabel, who is well-known for being a hawk. Shnabel said that the likelihood of high inflation becoming entrenched in expectations was "uncomfortably high" and argued that "central banks need to act forcefully". Latvian central bank Governor Martins Kazak was even more specific, stating that the ECB should be open to discussing 50 or 75 basis point moves. The ECB has raised rates but only to zero, well below the neutral rate of around 1.5%. This means that ECB policy continues to stimulate the economy, at a time when inflation and inflation expectations continue to move higher. The ECB will be hard-pressed to find the balance of raising rates without tipping the weak eurozone economy into a recession. Overshadowed by Powell's hawkish speech at Jackson Hole was a host of weak US releases. Personal income and spending data both missed expectations, while the Core PCE Index, the Fed's preferred inflation gauge, fell to 0.1% in July MoM, down from 0.6% in June and shy of the estimate of 0.3%. The weak numbers mean that the Fed may have to ease back on rate hikes, despite Powell's hawkish speech, as the data continue to indicate that the economy is slowing in response to the Fed's tightening. If upcoming releases indicate that the economy is losing steam, the dollar will be under pressure. EUR/USD has support at 0.9985 and 0.9880 There is resistance at 1.0068 and 1.0173
by OANDA