Release Explanation: Core Personal Consumption Expenditures (PCE) measures price changes in Consumer goods and services excluding food and energy, and consists of the actual and imputed expenditures of households. It includes data pertaining to Durables, non-Durables, and Services. It is essentially a measure of goods and services targeted towards individuals and consumed by individuals, therefore it is very important in assessing the sentiment of the Consumer, especially in a Service based economy. Also included with this report is data on personal spending and income. This is a very important release.

The impact from this release affects the CPI, Retail Sales, Housing and Consumer Confidence numbers. This is released at the same time as Personal Spending and Personal Income reports, and all three complete a very strong picture of consumer sentiment. Named by the Federal Reserve as their preferred measure of near-term Inflation.

A currency will be greatly impacted by this report as it reveals the strength of the public in their ability, or desire, to spend or save, and therefore how strong economic growth will be going forward. This report also contains monthly data on incomes.

Trade Desk Thoughts: In January, personal consumption rose 0.6% while personal income increased 0.4%, the Commerce Department said today. It was the first increase in spending for seven months. Consumers saved more also as the values of homes declined and the job market weakened; personal savings as a percentage of disposable personal income was 5.0% in January, the highest level since a 5.5% rate in March 1995.

Disposable personal income, income after taxes, rose by 1.7% in January after decreasing 0.2% in December.

The price index for personal consumption expenditures rose 0.2%, after a 0.5% drop in December. The PCE price index excluding food and energy, the so-called core PCE, was up 0.1% in January, following a 0.1% decline the month before.

Compared with a year earlier, the PCE price index rose 0.7%, after a 0.8% advance in December. The PCE price index excluding food and energy rose 1.6% year over year, after a 1.7% gain in December.

Forex Technical Reaction: S&P futures were trading lower by 15 points (-2%) immediately after the report and they gained about 1.25 points afterwards. The dollar weakened slightly against the higher-yielding currencies as the futures improved.