US Core PCE continues to rise; puts more pressure on Fed

It’s not a secret that inflation has been high in the US. US CPI and Core CPI has been on the rise for months. Today, the US released what is considered to be the Fed’s favorite measure of inflation for February, Core PCE (Price Consumption Expenditure) Price Index. The print was 5.4% YoY vs 5.2% YoY in January. Although this was a touch weaker than the 5.5% YoY expectation, it is still the highest level since April 1983. It should be noted that the headline PCE Price Index was 6.4% YoY vs 6.0% YoY in January. This was the highest level since February 1982. In addition, Personal Income for February was 0.5% MoM vs 0.1% MoM in January, while personal spending took a dive, up only 0.2% MoM vs 2.7% MoM in January. One has to consider how much of an impact rising prices played in the lower personal spending print.

What is inflation?

NZD/USD has been trading in a long-term downward sloping channel since the beginning of 2021, when prices reached a high of 0.7465. On January 26^th, price posted a false breakdown below the bottom of the channel and reached a low of 0.6507. Since then, NZD/USD has been moving higher and it’s currently trading near the 61.8% Fibonacci retracement level from the highs of October 29^th, 2021 to the low of January 26^th, near 0.6950. Yesterday, price briefly rose to the psychological round number resistance of 0.7000 before retreating today. The top trendline of the long-term channel comes in just above near 0.7045 and acts as the next level of resistance. If price trades above the channel line, horizontal resistance is at 0.7073. Above there NZD/USD has room to run up to the October 29^th, 2021 highs at 0.7224.

Source: Tradingview, Stone X

Trade NZD/USD now: Login or Open a new account!

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore

On a 240-minute timeframe, NZD/USD is in an ascending wedge pattern. The target on the break of an ascending wedge is a 100% retracement , or 0.6726. However, if price is to reach that level, it must first break the bottom, upward sloping trendline of the wedge near 0.6915. Below there is horizontal support at 0.6875, then the 50% retracement level from the lows of March 15^th to the highs of March 30^th near 0.6832.

Source: Tradingview, Stone X

As the Fed continues to catch up with the rest of the markets in realizing that inflation is indeed high, it now has another data point to refer to, Core PCE. The Fed doesn’t meet again until May. However, one has to consider the odds that the Fed may hike 50bps at the meeting, or possibly even hike inter-meeting!

Learn more about forex trading opportunities.

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.