US November PCE Price Index: When will it release and how can it impact EUR/USD? Know details here

The Personal Consumption Expenditure (PCE) Price Index is scheduled for release later in the early North American session. The index is expected to rise by 0.3%, in November, matching the previous month's reading. The annual rate is expected to have slowed to 5.3% from 6% in October. Meanwhile, the Core PCE Price Index – the Fed's preferred inflation measure is expected to fall to 4.7% year on year (YoY) in November from 5% the previous month.

One analyst at TD Securities (TDS) writes that they are expecting core PCE prices to have advanced at a consensus-matching 0.2% m/m pace for a second consecutive month in November. The y/y rate likely dropped to 4.6% from 5.0% in October, indicating that prices are continuing to moderate but remain sticky at high levels.

How could it impact EUR/USD?

Stronger PCE data may fuel speculation that the Fed will maintain its ultra-hawkish policy stance, pushing US Treasury bond yields higher. This will be enough to spark a new round of short-covering in the US Dollar and attract aggressive selling in the EUR/USD pair. Nonetheless, the data is likely to add volatility and provide significant impetus.




A recovery in global risk sentiment before the key release prompts some selling around the safe-haven US Dollar, helping the EUR/USD pair to regain some positive traction. Softer inflation data could boost bets on the Fed's less aggressive policy tightening. This should increase investors' appetite for riskier assets while putting further downward pressure on the US dollar.

About the US PCE Price Index

The Personal Spending released by the Bureau of Economic Analysis; Department of Commerce is an indicator that measures the total expenditure by individuals.

FAQs:

1. What are the main reasons for inflation?
   The main causes of inflation can be grouped into demand-pull, cost-push, and inflation expectations.
2. What is the US Price Index?
   The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services in the US.