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Core PCE/Personal Consumption And The $
Last month's 1.9% YoY reading of core PCE fell into the Fed's 1 to 2 percent target zone for the first time and the dollar went into a nosedive vs the high yeilders, especially as market conditions were favorable for risk taking and carry trades. Obviously, things are very different this time around due to last week's global equity sell off. Personal consumption has been in a YoY downtrend since at least last October and last month's reading (3.1) was the lowest since that time. With Monday's bounce back-good news on these fronts (lower inflation with improving consumption) will likely set off another round of equity buying and that means carry trades will be favored. In that case, the dollar would weaken vs the high yielders and resume its rise vs the Yen. Bad news (higher inflation with lower consumption) will likey cause a resumption of last week's sell-off which would unwind carry trades-weakening the dollar vs the Yen and strengthening it vs the high yielders. If your interested in subscribing to my blog, please let me know by sending an email to [email][email protected][/email] and please remember to use the box to the left to vote. Thanks.
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- Comment #1
- Jul 31, 2007 3:10am Jul 31, 2007 3:10am
- Fumafuma
- | Joined Dec 2006 | Status: Japanese Forex Analyst | 0 Comments
- Comment #2
- Edited 9:37am Jul 31, 2007 9:14am | Edited 9:37am
- NewstraderFX
- | Commercial Member | Joined Sep 2006 | 0 Comments