The Fed on the other hand is not going to be achieving consumer expenditure led growth. This is due to recent data showing personal income (Actual: 0.2%, Forecast: 0.3%, Previous: 0.5%, 29/08/2014) and personal expenditure (Actual: -0.1%, Forecast: 0.2%, Previous: 0.4%, 29/08/2014) declining, whilst durable goods and non-durables goods have remained constant, price-wise (Core PCE price index m/m, Actual: 1.6%, Previous: 1.6%, 29/08/2014). This could hurt the recovery significantly. This is well below the 2% benchmark inflation rate set out by the Fed. Hence we will not be seeing a rate hike until mid-2015. If the Fed increases the interest rate any earlier then the US economy could face huge problems. This week will tell us if there still exists any slack in the labour market as ADP Non-Farm Employment Change (Forecast: 216K, Previous: 218K, 04/09/2014) and Non-Farm Employment Change (Forecast: 222K, Previous: 209K, 05/09/2014) data is to be released later this week.
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EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.