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 is bullish for the US dollar.
Update: US Consumer Sentiment jumps to 98.2 – better than expected
Here are all the details, and 5 possible outcomes for EUR/USD.
Published on Friday at 14:55 GMT.
Indicator Background
The UoM 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 index improved for a fourth straight month, climbing to 93.8 points in December. This beat the estimate of 89.6 points. The markets are expecting the trend to continue, with the estimate standing at 94.2 points. Will the indicator match or beat this rosy expectation?
Sentiments and levels
QE is appearing more and more likely and we could see the ECB press the trigger at the January 22 meeting, after the euro-zone officially slipped into deflation. Weak oil prices and sluggish growth in Europe means that we are unlikely to see much improvement in the inflation picture. Concern about Greece and the tragic terror attack in Paris also weighed in. In the US, the economy continues to look good, with 252K jobs gained in December, but the slip in wages is causing some worries. So, the overall sentiment is neutral on EUR/USD towards this release.
Technical levels, from top to bottom: 1.1920, 1.1867, 1.1750, 1.17, 1.1620 and 1.15.
5 Scenarios
- Within expectations: 91.0 to 97.0: In such a case, EUR/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 97.1 to 101.0: An unexpected higher reading can send the pair below one support level.
- Well above expectations: Above 101.0: The chances of such a scenario are low. A second support line or more might be broken on such an outcome.
- Below expectations: 87.0 to 90.9: A poor reading could push the pair upwards, and one resistance level could be broken.
- Well below expectations: Below 87.0: A sharp drop in consumer confidence would likely hurt the dollar, and EUR/USD could break above two or more resistance levels.
For more on the euro, see the EUR/USD.
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