(MENAFN- DailyFX) Talking Points:
- The strong payroll report continues to leave wages behind
- The personal consumption index falls in line with estimates and the previous figures
- The US Dollar falls off of intrday high
- See the for upcoming economic data and for a schedule of live coverage see the .
See our longer-term forecasts for the US Dollar, , and more with the
Canadian gross domestic product captured much of the headlines this morning coming in at 4.5% over the 3.7% forecast. However, the US had payroll and inflation data on the docket which is what we will discuss below.
Payroll Report, Personal Income and Spending
Personal income came in a tad higher at +0.4% from the expected +0.3%. Personal spending came in a bit lower at 0.3% under the expected 0.4%. Jobless claims came in better than expected at 236K versus 238K forecasted. Continuing claims also beat estimates at 1,942K under the 1,951K forecast. Interestingly, despite the strong payroll report the overarching trend continues; as strong job growth persists so to does lagging wages and spending.
Personal Consumption Index
Yesterday we saw that . This morning, the headline and core July PCE came in line with estimates and the previous figures. The year-over-year figure came in at 1.4%, core month-over-month at 0.1%, and core year-over-year also at 1.4%.
PCE, unlike the Consumer Price Index is based on a fixed basket of goods services. The report is valued for forecasting inflationary pressures. Taken in excess, high levels of consumption and production may lead to an overall increase in prices. Contrarily, persistently low Personal Spending may result in decreasing levels of output and an economic downturn.
Normalization Path
The US Dollar is still up despite markets seeing little surprise. This makes a rate hike in December less likely than CME saw yesterday. According to their , the chance of seeing another rate hike in 2017 now stands at an unlikely 36% (down 5% from yesterday) at the December Federal Open Market Committee meeting.
Below is a list of economic releases that has driven the US Dollar higher:
- Personal Income (JUL): +0.4% versus +0.3% expected, from 0.0%
- USD Initial Jobless Claims (AUG 26): +236K versus +238K expected, from +235K previous (revised higher from 234K)
- USD Personal Spending (JUL): +0.3% versus +0.4 expected, from +0.2% previous (revised higher from 0.0%)
- USD Continuing Claims (AUG 19): 1,942K versus 1,951K expected, from 1,954K previous
- USD Real Personal Spending (JUL): +0.2% versus +0.3% expected, from 0.2% previous (revised higher from 0.0%)
- USD PCE Deflator (MoM) (JUL): +0.1% in line with estimates, from 0.0% previous
- USD Personal Consumption Expenditure Deflator (YoY) (JUL): +1.4% in line with estimates and previous
- USD Personal Consumption Expenditure Core (MoM) (JUL): +0.1% in line with estimates and previous
- USD Personal Consumption Expenditure Core (YoY) (JUL): +1.4% in line with estimates, from 1.5% previous
Chart 1: DXY Index 1-day Chart (August 31, 2017 Intraday)
As we look at a longer-term trend in the US Dollar Index we can see that the 'mini dollar rally has brought the dollar back above the the 92.56 support line. Following the release of the data DXY came off of the daily high and traded around 93.14
--- Written by Dylan Jusino, DailyFX Research
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