0.90 Holds in USDCHF After the Soft US PCE Inflation

The CHF to USD rate continues to trade in a 2-cent range, even after the soft US PCE inflation, with 0.90 holding again for USD/CHF . This forex pair experienced a notable rebound in the Asian session following a steep drop yesterday. The corrective rise, however, failed to surpass the 50% midpoint of the upward move from mid-May’s low, which comes above 0.9070. Today’s high reached 0.9069, falling just 3-4 pips short of the critical midpoint level.

USD/CHF Chart Daily – The 200 SMA Continues to Hold As Support

Then came the next selloff after the US PCE inflation report. The release of the core PCE data contributed to the pair’s decline, with the price now testing the major support at 0.90, with the low coming at 0.9002. A break below this level could lead traders to target another swing area around the 0.8989 level. The low for May at 0.8989 remains a significant bearish target if the price continues to drop.

US core Personal Consumption Expenditures (PCE) Data for April

• Core PCE (MoM): 0.2% vs. 0.3% estimate; prior month was 0.3%.
• Core PCE (YoY): 2.8% vs. 2.8% estimate; prior month was also 2.8%.
• PCE (MoM): 0.3% vs. 0.3% estimate; prior month was 0.3%.
• PCE (YoY): 2.7% vs. 2.7% estimate; prior month was 2.7%.

The unrounded core PCE came in at 0.249%, which sits right between 0.2% and 0.3%. The prior month’s unrounded figure was 0.317% (rounded to 0.3%).

PCE services prices excluding energy and housing: 0.3% vs. 0.4% previously.

Personal income and consumption data for April:

• Personal income (MoM): 0.3% vs. 0.3% expected; prior month was 0.5%.
• Personal consumption (MoM): -0.1% vs. 0.3% expected; prior month was revised from 0.5% to 0.4%.

Analysis

Impact on Inflation and Market Expectations:

• The core PCE MoM figure coming in lower than expected suggests a mild easing in inflationary pressures. This can be seen as a positive sign for the Federal Reserve’s efforts to manage inflation, though it might not be enough to alter the Fed’s current policy trajectory significantly.
• The YoY core PCE remained steady at 2.8%, indicating persistent inflation at a level still above the Fed’s long-term target of 2%.

Personal Income and Consumption:

• Personal income growth of 0.3% met expectations, suggesting stable wage gains.
• The unexpected decline in personal consumption (-0.1%) contrasts with the expected 0.3% increase, indicating a potential slowdown in consumer spending.

USD/CHF Live Chart