The fact that the Federal Reserve (Fed) targets the US core PCE deflator makes it more important than core CPI, FX strategist Kit Juckes at Societe Generale notes.

US PCE dominates the market

“The week’s data highlight seems to be the US core PCE deflator. The fact that the Federal Reserve (Fed) targets it makes it more important than core CPI, but the latter is more informative – I doubt the market will learn much.”

“The Canadian rates market is uncertain whether the Bank of Canada will cut rates in July or September and will react to any surprise from tomorrow’s CPI data (expected to show a 0.1% fall in headline and trimmed core readings to 2.6% and 2.8% respectively).”

“Australian May CPI matters less to the RBA than the quarterly figure at the end of July, but an as-expected acceleration back to 3.8% wouldn’t hurt the AUD. A pick-up in Tokyo’s inflation (Friday) to 2.3%, with core CPI is likely to be steady at 1.7%, won’t have much impact.”