USD/JPY back above 158 ahead of important US PCE and GDP reports

The move above 158 we reported on yesterday saw the dollar rise to 158.35 just as the Fed boss started to debrief the press. The fall back that followed saw it trade towards 157.75, ahead of a US close at 157.84. Much earlier today the dollar fell to 157.61, but since around 4am this morning it has been a slow and steady recovery. That has seen the USD/JPY reclaim the 158 handle a short while ago. The high seen so far has been set at 158.07. 

So, as you can see, in terms of the range so far this week, it really has not broken any fresh ground, but as noted earlier, we have some important US data due out at 12.30pm GMT which really could have an impact, one way or the other. 

We have the September PCE price index, which is expected to rise (expected +0.5% from +0.3%) and so is the annualised reading, from 3.4% to 3.6%. Core prices are forecast to rise by 0.3% (last +0.2%) and 3.1% annualised (last at 3%) . Annualised Q3 GDP is expected to come in at 3.2%, up from 2.2%. There are more moving parts to all this, but that is the nuts and bolts of it. 

The point being that if US PCE comes in much higher and so does GDP, then it does rather contradict the Fed decision to leave interest rates on hold last night. So, we suspect that either Warsh knows something we do not, or he is making a call on the data being pretty benign today. Either way the USD/JPY could react to this data and abruptly too. The USD/JPY is right now at 158.03