• Core PCE price index stays unchanged at 2.7% y/y
• Personal consumption accelerates to 0.5% m/m
• But US dollar stays on the backfoot

Inflation as measured by the personal consumption expenditures (PCE) price index fell to 2.1% y/y in September, but the underlying measure was unchanged at 2.7% y/y. The decline in the headline figure was in line with expectations but core PCE was forecast to have moderated to 2.6% y/y.

The data underscores worries that underlying price pressures are proving to be stickier than anticipated and this may keep the Fed from cutting interest rates too aggressively.

Personal consumption also surprised to the upside, picking up to a 0.5% m/m pace in September.

Furthermore, weekly jobless claims fell to the lowest since May, which comes a day after the ADP employment change printed at a solid +233k for October and a day before the all-important nonfarm payrolls report.

Yet, the US dollar failed to bounce higher after the data, suggesting that some traders were anticipating even stronger numbers and that overall, this week’s releases are not seen as derailing the Fed’s rate-cutting campaign.  The Fed is widely expected to trim rates next week by 25 bps.

The euro extended this week’s rebound, making its way towards the $1.09 handle.