Key data preview: US economy PCE deflator coming up - Nomura


Analysts at Nomura offered their outlook for the next key data for the US dollar and US economy that the Fed will be playing close attention to.

Key Quotes:

"PCE deflators: Relevant data from the July CPI and PPI report suggest a gradual pickup in core PCE inflation in July. Our forecast for July core PCE price inflation is a 0.1% (0.069%) m-o-m increase, equivalent to a 1.4% (1.38%) y-o-y gain (Consensus: 0.1% mo-m, 1.4% y-o-y).

Core CPI inflation rose only 0.1% (0.114%) m-o-m in July.

A major surprise was the sharp 4.2% m-o-m drop in lodging-away-from-home prices, which subtracted about 5bp from the m-o-m core PCE inflation rate. Although we expect this downside surprise in lodging-away-from-home prices to be transitory, it adversely affected our July m-o-m core PCE price index forecast by about 4bp as hotel and motel prices account for 0.9% of the core PCE price index. Further, portfolio management and investment advice service prices and passenger air transportation prices (both from the PPI report) declined sharply, creating more drag on core PCE inflation.

Moreover, a slowdown in rent CPI inflation will likely continue to weigh on core PCE inflation. However, decent increases in hospital prices from the PPI and prescription drug prices from the CPI were positive to core PCE inflation and may have partially offset the weakness in other subcomponents of the core PCE index.

Among noncore components, we expect aggregate energy PCE prices to fall 0.1% m-om. The prices of various energy commodities in CPI, such as motor fuel and piped gas, fell in the month, which may adversely affect the corresponding subcomponents of the PCE energy index.

For food PCE inflation, we expect a steady 0.2% gain based on the CPI food-at-home price index. Altogether, we expect the headline PCE index to increase by 0.1% (0.069%) m-o-m, which is equivalent to a 1.38% y-o-y increase (Consensus: 0.1% m-o-m, 1.4% y-o-y)."

Share: Feed news

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. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD holds above 1.0450 after sentiment data

EUR/USD holds above 1.0450 after sentiment data

EUR/USD struggles to gain traction but holds steady above 1.0450 in the European session on Tuesday. ZEW Survey - Economic Sentiment for Germany and the Eurozone improved in February, helping the Euro limit its losses. 

EUR/USD News
GBP/USD holds above1.2600 after UK labor market data

GBP/USD holds above1.2600 after UK labor market data

GBP/USD struggles to attract buyers but holds above 1.2600 in the European session on Tuesday. The data from the UK showed that the ILO Unemployment Change remained unchanged at 4.4% in the three months to December, coming in better than the market expectation of 4.5%.

GBP/USD News
Gold in second day of gains with US and Russian officials meeting for peace talks

Gold in second day of gains with US and Russian officials meeting for peace talks

Gold sets forth rally and pops above $2,900 at the start of the European trading session on Tuesday. Markets brace for headlines to come in from Saudi Arabia where US and Russian officials are meeting. A daily close above $2,910 could put Gold on track for a new all-time high this week. 

Gold News
Canada CPI set to remain at 1.8% in January, fueling BoC easing stance

Canada CPI set to remain at 1.8% in January, fueling BoC easing stance

This Tuesday, Statistics Canada will unveil its latest inflation report for January, based on data from the Consumer Price Index (CPI). Early forecasts suggest that headline inflation held steady at 1.8% compared with January of last year.

Read more
Rates down under

Rates down under

Today all Australian eyes were on the Reserve Bank of Australia, and rates were cut as expected. RBA Michele Bullock said higher interest rates had been working as expected, slowing economic activity and curbing inflation, but warned that Tuesday’s first rate cut since 2020 was not the start of a series of reductions.

Read more
The Best Brokers of the Year

The Best Brokers of the Year

SPONSORED Explore top-quality choices worldwide and locally. Compare key features like spreads, leverage, and platforms. Find the right broker for your needs, whether trading CFDs, Forex pairs like EUR/USD, or commodities like Gold.

Read More

Forex MAJORS

Cryptocurrencies

Signatures

Best Brokers of 2025