Overview and expectations for September 25, 2018

Overview and expectations for September 25, 2018 including US consumer confidence

This overview highlights the most significant economic event taking place today: US Consumer Board Consumer Confidence. Traders can benefit from anticipating and understanding how these data releases can affect the markets.

Today’s overview focuses on the US CB Consumer Confidence. This data can affect the markets and the respective country’s currency. Traders can benefit by anticipating those effects and trading accordingly.

US CONSUMER BOARD CONSUMER CONFIDENCE

The US consumer conference board calculates consumer confidence within the market. Consumer spending is an important signal in a trader’s arsenal, used to identify changes in a country’s currency. A higher than expected reading promotes confidence for a stronger currency, while a lower than expected value are a bearish for the USD.

In August, US consumer confidence has been higher than the expected 126.7 mark at 133.4. According to the Director of Economic Indicators at The Conference Board Lynn Franco “Consumer confidence increased to its highest level since October 2000 (Index, 135.8), following a modest improvement in July. Consumers’ assessment of current business and labor market conditions improved further. Expectations, which declined in June and July, bounced back in August suggesting solid economic growth for the remainder of 2018. Overall, these historically high confidence levels should continue to support healthy consumer spending in the near-term.”

US DOLLAR TO HOLDS STEADY AFTER SMALL DROP

In contrast, although US economic data has remained strong, last Thursday, the Dollar dropped 0.3% to 94.217. This was a result of the rising concerns about the ongoing trade war between the US and China. This has brought the currency to its lowest level since July 31. The slide of the Dollar has been beneficial to Emerging Markets and currencies such as the Indian rupee potentially protecting them from the aftermath of the trade war.  “A softer USD would make US products more competitive abroad and help with the US trade deficit – and reduce the need or risk of escalating tariffs against EM countries,” said Roger Horn, analyst at SMBC Nikko Securities.

Although some forecasts expect a drop in the reading to 131.3,   other analysts share the conference board’s confidence for consumer spending. If September’s actual reading falls within expectations, this will most likely indicate a bearish move for the US dollar. However, if consumer confidence is higher than expected, this will mean a bullish change for the USD.

For more information about how to use the economic indicators like US consumer confidence to make the most out of your investments, contact FXB today.

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