About PCE Price Index (USD)
Personal Consumption Expenditures (PCE) is a broad price index for the United States economy that covers all goods and services consumed by households. The Federal Reserve prefers PCE over CPI as its primary inflation gauge.
Why FX traders watch it
Because the Fed targets 2% PCE inflation, surprises in this release can directly reprice Federal Funds rate expectations and drive significant moves in the usd. It is typically released as part of the monthly Personal Income and Outlays report.
How to interpret the data
PCE above 2% (year-on-year) signals the Fed may need to hold rates higher for longer, supporting the usd. A rapid decline toward or below 2% increases the likelihood of rate cuts, which is usd-negative.