US PCE slightly exceeds forecast


U.S. personal income rose 0.4% in January, with spending up 0.2%. There were no revisions to December gains of 0.3% and 0.5%, respectively, but November income was bumped up to 0.2% from 0.1% previously. Wages and salaries were up 0.4%, the same as in December. The savings rate edged up to 5.5% from 5.4%. Real spending declined 0.3%, however, after a 0.3% December gain. The inflation data are heating up. The PCE deflator jumped to a 0.4% rate from 0.2%, with the core rate up 0.3% compared to 0.1% in December. On an annual basis, headline PCE is at a 1.9% y/y clip from 1.6% y/y, with the core rate steady at 1.7% y/y.

Due to a slight increase in personal income and a softer change in consumptions we have noticed a pick up on dollar, where USDJPY printed two-week highs of 113.93, as EURUSD touched 1.0515, a six-session low. Additionally, cable has traded below 1.2300 for the first time since 20th January. The 1-hour GBPUSD chart has broken below the lower Bollinger bands patterns at 1.2329, while RSI has been in over sold territory since noon. RSI keeps its negative slope in a 4-hour chart. Furthermore, in a 4-hour chart, Parabolic SAR and the MACD histogram remain in the negative territory, since yesterday. All these technical moves, presented in the 1-hour chart and 4-hour chart, suggest that weakness noticed since Friday, might continue for a while.

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Andria Pichidi

Market Analyst


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