Economic data from the US remained bleak, as the Conference Board's consumer confidence index fell to a new record low of 37.7 during the month of January from 38.6, missing expectations of a slight rise to 39.0. A breakdown of the report showed that sentiment on the present situation and on economic expectations both turned more pessimistic with an increasing number of consumers believing that business conditions were bad (versus good and normal). However, there was a bit of stabilization regarding outlooks for employment and income, as more consumers thought that prospects would remain the same in 6 months. That said, the majority of those surveyed (over 50 percent) said that employment was currently either "not so plentiful" or "hard to get," suggesting that the next round of non-farm payrolls (NFPs) should be disappointing, creating additional downside risks for consumption going forward.
Looking ahead to Wednesday, the Federal Open Market Committee (FOMC) is widely expected to leave the fed funds target range at 0.0 percent - 0.25 percent, and this should remain the case throughout much of the year. In fact, the FOMC said in December that their focus going forward will shift to supporting “the functioning of financial markets” and the stimulation of “the economy through open market operations and other measures that sustain the size of the Federal Reserve's balance sheet at a high level.” Thus, the only important part of this meeting will be to watch the FOMC’s subsequent monetary policy statement to see if they announce any new efforts meant to improve credit conditions. The statement may have an impact on risk trends, and any news that is positive for the stock markets may be negative for the greenback, which has been trading solely as a safe-haven asset lately. Furthermore, the Committee is anticipated to issue news forecasts for GDP and CPI, which has the potential to shake up volatility.
Related Articles: US Dollar Weekly Trading Forecast, Japanese Yen Weekly Trading Forecast
To stay on top of the day's economic developments, read Daily Fundamentals.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
Learn forex trading with a free practice account and trading charts from FXCM.
