Friday's data shows that the Fed's preferred inflation indicators rose at a moderate pace in July, with household spending remaining stable. This indicates that policymakers have been able to suppress price pressures without causing too much pain for consumers, achieving a soft landing so far.

The core PCE price index in the US recorded an annual rate of 2.6% in July, consistent with the previous month and slightly lower than the market's expectation of 2.7%. The monthly rate stayed at 0.2%, in line with expectations. The PCE price index in the US for July recorded an annual rate of 2.5%, lower than the expected 2.6%, and the same as the previous value of 2.5%; the monthly rate increased from 0.1% in the previous month to 0.2%, meeting expectations. Personal spending in the US for July, as expected, increased from 0.3% in the previous month to 0.5%.

After the release of the PCE data, spot gold fell $6 in the short term, while the US dollar index rose 16 points in the short term. Short-term interest rate futures in the US slightly declined. US equity index futures rose slightly.

Analysts say that overall US personal income and spending data is positive, with income and real spending slightly better than expected. The overall price index is consistent with expectations, while the year-on-year change in core prices is slightly lower than economists' forecast. The month-over-month core services inflation rate was 0.21%, the same as May and June.

The analyst believes that overall, there is nothing to prevent the Fed from cutting interest rates next month... but for the same reason, there is also no evidence to suggest that a 50 basis point cut is warranted. Therefore, these data may not cause too much volatility as we approach the end of the month (and the release of the employment data one week later).

Usa consumer spending in July grew steadily, indicating that the economy remains relatively solid at the beginning of the third quarter, which does not support the argument for a significant rate cut by the Federal Reserve next month as some people believe.

Following the surge in unemployment rate to a near three-year high of 4.3% in July, concerns about the health of the US economy have arisen, leading to some calls for a 50 basis point rate cut by the Federal Reserve in September. However, policymakers also note that the slowdown in the labor market is mainly due to reduced hiring rather than layoffs.

Most economists still believe that the Federal Reserve will reject a 50 basis point rate cut because the economy continues to show strong growth and although inflation has slowed significantly, it is still above the target of 2%.

Joe Davis, Chief Economist at Vanguard, expects that the July PCE data will not affect the Fed's expected path of interest rate cuts. He believes that the Fed will cut interest rates by 25 basis points at the September and December meetings this year.

Fed Chairman Powell stated last week that the time has come for the Fed to lower its key policy rate. He affirmed the market's expectation that Fed officials will begin to lower borrowing costs next month and explicitly stated that he intends to prevent further cooling of the labor market.

Dutch international bank analyst Francesco Pesole pointed out that the majority of the dollar's decline may have already occurred due to market confidence in the Federal Reserve's accommodative policy. In addition, the upcoming Labor Day holiday in the United States on the following Monday may also be beneficial for range trading on Friday.

Editor/Emily