The University of Michigan Consumer Sentiment Index surveys consumer attitudes and expectations about the US economy. An increase in consumer confidence is a positive sign about the health of the economy, and a reading that is higher than forecast is bullish for the US dollar.
Here are all the details, and 5 possible outcomes for USD/JPY.
Published on Friday at 13:55 GMT.
Indicator Background
The University of Michigan Consumer Sentiment Index, which is released monthly, is an important leading economic indicator. It helps measure future spending behavior, and provides an indication of consumer confidence in the economy. Analysts look to the index to help answer that all-important question of “is the US consumer optimistic or pessimistic about the economy?”
The figures for the previous release came in at 73.6 points, beating the market estimate of 72.5 points. The September estimate stands at 74.1 points. Will the consumer indicator meet or beat the improved forecast?
Sentiments and levels
The yen has enjoyed a superb September rally against the dollar, as USD/JPY has reached a seven-month high. But will this momentum continue? QE3 would certainly be bearish for the greenback, but the red-hot yen will likely cool off if Bernanke disappoints yet again. Eithe way, the BOJ is feeling pressure to push down the yen and give Japanese exports some relief. So, the overall sentiment is neutral on USD/JPY towards this release.
Technical levels, from top to bottom: 79.05, 78.80, 78, 77.50, 77, and 77.60.
5 Scenarios
- Within expectations: 70.0 to 78.0: In such a case, USD/JPY is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 78.1 to 82.0: An unexpected higher reading can send the pair above one resistance line.
- Well above expectations: Above 82.0: The chances of such a scenario are low. Two or more resistance lines could be broken on such an outcome.
- Below expectations: 66.0 to 69.9: A poor reading could push down on the pair, and one support level could be broken.
- Well below expectations: Under 66.0: A sharp drop in consumer confidence will likely hurt the dollar, and USD/JPY could break two or more support levels.
For more on the yen, see the USD/JPY.