THE TAKEAWAY: U. of Michigan Confidence Index Surprises > Consumer Sentiment Improves > USDollar Falls
Confidence among U.S. consumers unexpectedly picked up in September, according to the Thomson Reuters/ University of Michigan index of consumer sentiment released today. The index rose to 59.4 for this month from 55.7 in August, which was the lowest reading since the financial crisis in 2008. The U.S. Dollar strengthened shortly amid eased concern that the largest economy is on the brink of recession.
U. of Michigan Confidence Index: September 2008 to Present
Today’s Michigan report beat the median projection by Bloomberg News survey, which called for an unchanged reading from last month’s dismal 55.7. As consumers’ improved expectation may translate into increased spending that accounts for 70 percent of U.S. economy, market participants scaled up some appetite for risk and sent the high yielding assets higher.
EUR/USD 1-minute Chart: September 30, 2011
Charts created using Strategy Trader– Prepared by James Hao
The EUR/USD pair gained 20-pips following the better-than-expected release. But a lack of job and income growth, signs of slowdown in Germany and China, as well as concerns over the effectiveness of expanded EFSF continue to cloud on currency market. Market participants bear down the pair as they tend to ignore the fundamental implications of the reading and weigh on the contagion risk in the single currency bloc. At the time this report was written, EUR began to pare its gains and oscillate at around $1.3440.
Written by James Hao, DailyFX Research Team
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
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