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USD/JPY binary signal - U.S. PCE Price Index - 30 May 2017

Signal details
Entry Price: 
111.00
Close Price: 
110.75
Direction: 
High
Expiry Time: 
20:00 GMT
Result: 
OTM
How we trade
5/5 of 4 ratings

The United States Personal Consumption Expenditure data, or PCE is the Federal Reserve's preferred gauge of inflation. The core PCE data due to be released today is forecast to show a reversal, offsetting last month's 0.1% declines. Median estimates suggest that core PCE might have increased in April, rising 0.1% on the month or 1.5% on a year over year basis. This is slightly lower than 1.6% core PCE rate that was registered a month ago annually.

The PCE data is expected to be released at 12:30 PM GMT today and the data could see some impact in shaping the expectations for the Fed's rate hikes which is due in under two weeks' time.

Besides the PCE data, the U.S. personal spending and income data is also coming out and economists forecast a strong pickup on personal spending, which is expected to rise 0.4% on the month. Personal income is also expected to double from 0.2% gains posted the month before to 0.4% in April.

Inflation in the United States has pulled back after surging strongly in the first quarter of the year. The core PCE is still below the Fed's 2% inflation target rate. Still, the Fed moved ahead with rate hikes based on strengthening core PCE data.

If today's PCE numbers fail to show any signs of pressures, the prospects of a rate hike could diminish. Currently, the Fed is projected to hike rates two more times this year, with the next rate hike expected at the June 14 FOMC meeting.

A weaker than expected core PCE could seriously dent the prospects as it would mark a second consecutive month of decline in inflationary pressures.

For today's binary options signal recommendation, we suggest to purchase daily CALL options on USDJPY. While USDJPY has been weaker, we expect this could change. Therefore, look to purchase daily CALL options at 111.00 for a 20:00 GMT expiry time on a rebound off the support level at 110.80 that the currency pair is testing currently.

Disclaimer: The article is written for informative purposes only and it is not financial advice. The author does not have any position in the currency pairs mentioned, and no plans to initiate a position. He wrote the article himself and expressed his own opinions. He has no business nor personal relationships with any mentioned government entities or stocks. Readers should not treat any opinion expressed by the author as a specific inducement to make a particular trade or follow a particular strategy, but only as an expression of his opinion.