Market interest rate cuts are expected to rise, US PCE data becomes key

Previews of interest rate cuts have risen, and US PCE data has become the key

Last week, Federal Reserve Chairman Powell sent a strong signal of interest rate cuts at the Jackson Hall meeting, and market sentiment was boosted. However, this week’s personal consumer price expenditure index (PCE) data will have an important impact on the Fed’s interest rate cut policy, which deserves close attention from traders.

U.S. PCE inflation data:

This Friday, the United States will release its July PCE data. Although PCE is not as well-known as CPI, it is a key indicator for the Federal Reserve to measure inflation. If data show that inflation continues to approach the target level of 2%, and consumer spending and labor markets remain stable, this decline could lead to a period of relatively stable economic conditions.

Australian CPI data:

On Wednesday, Australia will release monthly CPI data. The annual CPI rate fell slightly to 3.8% in June, but the RBA hopes to see a more significant decline before considering adjustments. If inflation does not drop further in July, the RBA may maintain its current hawkish stance and support the Australian dollar.

Eurozone CPI report:

On Friday, the euro zone will release its initial CPI value for August. Overall inflation is expected to drop to 2.3% from 2.6% in July, and core inflation is expected to drop slightly to 2.8%. If the data meets expectations, it could pave the way for the ECB to further relax policy in September.

Bank of Canada Policy Forecast:

The Bank of Canada is already at the forefront of rate cuts. As inflation meets expectations, the market expects the possibility of a rate cut in September is more than 90%. However, if the second-quarter GDP data released on Friday showed stronger-than-expected economic growth, the Bank of Canada may choose to remain silent. In addition, the June wage growth data released on Thursday will also affect the Canadian dollar.

In general, inflation data has a profound impact on economic policies and traders’ decisions in various countries. As traders, we need to have a keen insight into these macroeconomic indicators, adjust trading strategies and risk management plans in a timely manner to cope with fluctuations in market sentiment, so that we can go further and further on the trading road!