US core PCE inflation in play today
|-
Eurozone inflation falls to a three-year low.
-
US recession fears ease.
-
US core PCE inflation in play today.
Another positive start for European stocks, as traders continue to react of a raft of inflation metrics that have lifted hopes of a forceful period of monetary easing from the ECB. While yesterday brought substantial declines across Spain (2.2%) and Germany (1.9%), this morning brought the wider eurozone inflation gauge which feel down to a three-year low of 2.2%. With inflation on the cusp of hitting its target, the ECB are clearly in a position to act forcibly in a bid to spark an economic resurgence for the single currency region.
The US economic outlook comes back into focus today, following on from yesterday’s improved GDP metric that allayed recent fears of a potential impending recession. Coming off the back of an impressive 9.9% core durable goods orders figure, yesterday’s 3% GDP metric for the second quarter has helped eased calls for a 50-basis points cut next month. With Nvidia earnings out the way, traders will undoubtedly feel more confident as we move into a September than many expect to herald a widespread move towards monetary easing that should help boost economic growth and lift equity markets.
For today, the big focus lies on the latest US core PCE price index release, with the trajectory of the Fed’s favoured inflation metric helping to impact expectations for rates going forward. Currently standing at 2.6%, any additional disinflation that might come today would help further the case for a 50-basis point cut in September. Nonetheless, the trajectory for US inflation looks likely to remain somewhat flat for the rest of 2024, with the Fed having to cut rates despite above target price growth. For now markets can feel emboldened, but there is a risk that such expansive monetary policy could yet help rekindle inflation pressures.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.