Money flow – positioning before PCE data (today 15:30)

On the economic front, new data released earlier showed that the US economy continues to slow, with economic growth and job creation lower than expected in the second quarter and August.

Current dollar personal income increased by $232.1 billion in the second quarter, down $3.9 billion from the initial estimate, while disposable personal income was revised up by $36.3 billion to $284.5 billion. An increase in personal income is positive for the current market environment because it fuels inflation, while a weaker one would be viewed more optimistically by the market.

Elsewhere, private-sector job growth has also lagged expectations, signaling a potential cooling in labor market dynamics that raises the stakes that the Fed may sooner start cutting rates.

Today at 15:30 will be released data on unemployment claims in the US and they are expected to be higher than expected, which would support upward positioning in the indices before Friday’s payrolls. On the other hand, higher-than-expected data could put pressure on the dollar. Traders may remain nervous as PCE data is expected to come in higher, which would renew concerns about the latest CPI report showing an increase in inflation.

Trade could remain highly volatile ahead of the data as labour market and inflation expectations diverge at the current time.