THE TAKEAWAY: USD U. of Michigan Confidence (MAR P) > 71.8 versus 78.0 expected, from 77.6 > USDJPY BEARISH
The US consumer is raising their proverbial eyebrows and beginning to doubt the future of the US economy, all thanks to the self-induced budget sequestration imposed by feckless politicians. The U. of Michigan Confidence (MAR P) had its biggest drop ever, falling by -5.8 points, to 71.8 from 77.6, well-below the expected reading of 78.0, according to a Bloomberg News survey.
Largely speaking, consumers are finding that the future is becoming less bright, with the Economic Outlook subcomponent sliding from 70.2 to 61.7, the lowest reading since November 2011. In the near-term, however, confidence is more stable, with the Economic Conditions subcomponent easing to 87.5 from 89.0 in February.
USDJPY 1-minute Chart: March 15, 2013
Charts Created using Marketscope – Prepared by Christopher Vecchio
Following the release, the USDJPY, perhaps the most sensitive USD-pair to shifting Treasury yields, fell from 95.80 to fresh session lows below 95.50.
Considering that confidence tends to lead equity markets, this could bode poorly for the S&P 500 has it tries to retake all-time highs above 1570.
Likewise, if the S&P 500 is coming into a top, so too might the USDJPY, which have been moving in lockstep since mid-November 2012, when the Japanese elections were announced and it became clear that arch-dove Shinzo Abe would become the prime minister of Japan.
--- Written by Christopher Vecchio, Currency Analyst
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