Today’s decline in consumer confidence may be attributed to a stubbornly high unemployment rate in the United States that has investors questioning the health of the world’s largest economy. Private Payroll growth remains weak as shown by statistics surrounding the Non-Farm Payrolls report earlier this month (83K vs. 113K expected). Additionally, the fall in the U.S. stock market may serve as another catalyst for the massive decrease. All in all, consumers remain fearful of policy changes, while weak housing prices, high unemployment, and tight credit conditions continue to weigh on sentiment.
Market Reaction
The USD/JPY looks to have extended its overnight decline and now looks poised to take out resistance of 86.00. Today’s southern journey began with the Bank of Japan raising their growth forecast, while holding their key overnight lending rate at the record low. Investors should caution holding onto their short positions going into next week as daily studies indicate that the pair is oversold.
All major currencies pushed lower against the Japanese Yen and extended their decline following the disappointing U. of Michigan confidence report. The strength in Japanese yen is of particular note as broader risk aversion will likely offset euro optimism.
Written by Michael Wright, Currency Analyst & Jay Steinberg, DailyFX Research
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Michael Wright is the author of FX Headlines, Fundamentals vs. Technical's, Weekly Spotlight, and Forex Trading Weekly Forecast
DailyFX provides forex news on the economic reports and political events that influence the currency market.
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